CME, Bank of Montreal push tokenized cash service…expanding 24/7 payments infrastructure

Traditional financial institutions are moving to build payments infrastructure using asset tokenization. The market is increasingly seeing momentum build toward processing inter-institution fund transfers and collateral settlement around the clock.

According to Bloomberg, a media outlet specializing in virtual assets (cryptocurrencies), Canada’s Bank of Montreal (BMO) is working with CME Group to roll out a tokenized cash service for institutional clients.

The core of the service is to convert bank deposits and cash into blockchain-based token form so funds can be moved at any time. Derek Vernon, head of treasury and payments solutions for BMO North America, said, “Clients will be able to move funds based on market demand rather than bank business hours.”

The two companies plan to launch the service in the second half of this year and, after regulatory approval, offer it primarily to institutional investors and commercial bank clients. This is expected to enable 24/7 trade settlement, margin settlement and collateral transfers.

Tokenized cash is drawing attention as a way to improve payment efficiency between institutions. The outlet reported that “financial institutions and exchanges are expanding adoption of tokenization technology to extend the hours for asset trading and transfers.”

Meanwhile, the market views tokenization as a key technology for removing time constraints in existing financial infrastructure, with institution-led use cases gradually expanding.