Canada is set to take a major step forward in payments modernization with the launch of the Real-Time Rail (RTR) in Q3 2026. Delivered by Payments Canada, the RTR exchange will enable irrevocable, data-rich payments that are exchanged and settled within seconds, 24-7. Additionally, real-time payments growth will be fuelled by the migration of transactions from existing systems and through the adoption of account-to-account payments. As such, the RTR is expected to become the system of choice to support open banking-enabled payment services, when introduced. However, since the COVID-19 pandemic, payment innovation has accelerated significantly, and the RTR will face new entrants that were not envisioned when the system was designed.
Payment system operators around the globe have been closely monitoring activities related to central bank digital currencies (CBDCs) and, more recently, stablecoins. CBDCs are a digital form of a country’s official currency, issued and controlled by the central bank, that exist alongside physical cash and coins. Stablecoins, on the other hand, are privately issued digital currencies pegged to a stable asset, usually the US dollar, and backed by high-quality liquid assets. These two payment types offer fast, secure, transparent and efficient transactions and use distributed ledger technology, usually blockchain, as their underlying infrastructure. A significant capability enabled by blockchain is programmability: the ability to trigger the automated execution of a payment based on predefined conditions. Because CBDCs and stablecoins operate outside of existing payment systems on standalone infrastructure, both could complement and compete with the RTR.
In 2017, the Bank of Canada (BoC) announced it was exploring a CBDC to supplement physical cash and to be prepared in the event a digital dollar was needed in the future. CBDC policy objectives included universal access to a ubiquitous medium of exchange, privacy for users and maintenance of financial stability. Over the past two years, the BoC has engaged in extensive industry consultation, including identification of potential impacts of a CBDC on RTR payment flows and volumes and how these two real-time payment systems might complement one another. The result of this exploration was shared in September 2024, with the BoC stating that a CBDC might not be necessary at this time given high levels of financial inclusion in Canada and the availability of other payment methods. The BoC will continue to monitor global CBDC activities and has shifted focus to broader payments system research and policy development.
Although blockchain technology is proven, stablecoins — and especially unregulated stablecoins — present meaningful risk.
Global CBDC activities are tracked by the Atlantic Council: three countries are live with CBDCs (the Bahamas [2020], Jamaica [2022] and Nigeria [2021]); 137 countries and currency unions, representing 98 percent of global GDP, are exploring a CBDC; and 72 countries are in advanced phases of development, pilot or launch. Notably, in January 2025, US President Donald Trump issued an executive order that prohibited US agencies from undertaking actions to establish, issue or promote a CBDC. However, the order does not prevent the United States from continued involvement in discussions and collaborative efforts with other central banks on cross-border payments research.
The most recent CBDC announcement came in late June when the European Central Bank announced it had selected two blockchain platforms, XRP Ledger and White Network, for CBDC evaluation. The pilot will run for 12 months and includes participation from more than 500 organizations to assess real-time cross-border payments, full regulatory compliance and seamless digital currency integration.
Integrating Stablecoins into Canadian Payments
Stablecoins were introduced in 2014 as a means for cryptocurrency traders to protect gains. Stablecoin market cap has increased from US$500 million in 2019 to US$250 billion in mid-2025, and while growth has historically aligned with the crypto market, other use cases are gaining traction. An estimated 5–10 percent of stablecoin volumes now support payments, and this figure is expected to increase. Stablecoin is particularly well suited to address complex payments processes, improve transaction speed and reduce costs.
Large payments companies have started embracing stablecoin. Mastercard, Visa and others are leveraging stablecoins to drive back-end efficiencies and launching new products that enable customers to spend them at point of sale by linking cards to crypto wallets. PayPal has issued its own stablecoin. Payment processors Stripe and Shopify have introduced stablecoin acceptance for their retail customers. In addition to reducing interchange expense, the use of programmable stablecoin could provide merchants with more control over the customer experience (for example, loyalty programs).
Although blockchain technology is proven, stablecoins — and especially unregulated stablecoins — present meaningful risk. Stablecoins can carry credit risks, making them susceptible to runs on the underlying assets, and can pose risks for monetary policy and financial stability. These risks can be mitigated through the establishment of clear reserve requirements and regular reporting and auditing. The structure of the stablecoin market exhibits significant concentration risk as 98 percent of stablecoins in circulation are pegged to the US dollar and two issuers (Tether [65 percent] and Circle [22 percent]) dominate the market. In a June 2025 report, the Bank for International Settlements warned that stablecoins are not money and stressed that if stablecoins are to operate at scale, they must be regulated by the same standards as traditional payment systems and banks.
Currently, a handful of countries have established regulatory frameworks for stablecoins and a number of countries are developing frameworks. The European Union was the first jurisdiction to establish a comprehensive regulatory framework for crypto-assets, including stablecoins, with markets in crypto-assets coming into full force in December 2024. The US Senate has proposed a comprehensive federal regulatory framework for stablecoins (the GENIUS Act), and it is expected that a compromise bill could be finalized and passed by the end of 2025. This legislation will have impacts on stablecoins globally given that many of them are issued in the United States and pegged to the US dollar.
In Canada, stablecoins are currently regulated as investment products rather than payment instruments. In late June, the superintendent of financial institutions, Peter Routledge, announced that the federal finance ministry, supported by the BoC, is working on a legislative framework that will provide clarity for stablecoin issuance in Canada and that the final federal framework for stablecoins will be implemented by the Office of the Superintendent of Financial Institutions for banks and other regulated companies. This legislation should support stablecoin innovation and adoption and ensure that Canada keeps pace.
Where to from Here?
Blockchain technology allows CBDCs and stablecoins to offer robust payment capabilities that existing payments infrastructure simply cannot match. The recent announcement that Canada will develop a legislative framework for stablecoin should accelerate its introduction and usage. However, it is difficult to imagine that the issuance of Canadian dollar-based stablecoins would be permitted in Canada without a digital Loonie available as a competitive, reliable and less risky alternative — and the BoC’s CBDC initiative might ramp back up as a result.
Canada should envision and prepare for a future where the RTR, CBDCs and stablecoins coexist, at least for a time. As such, a coordinated national payments strategy is needed — one that defines where and how these real-time payment options can operate in a complementary manner to safely foster innovation, maintain confidence in the financial system and allow Canada to compete globally.
