The technical architect for China’s state-backed Blockchain-based Service Network (BSN), Hong Kong-based Red Date Technology, has launched a new project to make stablecoins and central bank digital currencies (CBDCs) interoperable in order to enable cross-border payments.
On Thursday at the World Economic Forum in Davos, Red Date announced the launch of the Universal Digital Payments Network (UDPN) project. The aim of the project, as stated in a UDPN white paper, is to enable businesses from various nations to conduct transactions and settlements using various regulated digital currencies.
Some have drawn comparisons between the new project and the outdated SWIFT network. The Society for Worldwide Interbank Financial Telecommunication (Swift) is the most commonly used system for transmitting money between banks globally. However, the new project aims to make stablecoins and central bank digital currencies (CBDCs) compatible and interoperable.
It could also be considered a Ripple competitor. But the firm works with private financial institutions rather than central banks. However, the company partners with private financial institutions rather than central banks.
As Red Date Technology also develops the Blockchain Service Network (BSN), the project is likely to be closely monitored by the Chinese Communist Party (CCP). The UDPN white paper did not mention China’s digital yuan CBDC (eCNY).
Just as the Swift network created the original common standard for messaging between financial institutions across different settlement systems, the UDPN will serve the same purpose for the emerging generation of CBDCs and stablecoins,the company wrote in the paper.
Red Date announced that several “global Tier 1 banks” will participate in proof-of-concept trials for the Universal Digital Payments Network (UDPN) from January to June. The trials will examine how UDPN addresses the challenges of integrating digital currency into daily business, banking, and payment scenarios, the company said.
The names of the banks were not disclosed, but representatives from international banks such as Deutsche Bank, HSBC, Standard Chartered, and Bank of East Asia participated in a panel discussion at the UDPN launch event.
According to the UDPN website, one of the proof-of-concept tests for Universal Digital Payments Network (UDPN) is focused on CBDCs, examining “how two commercial banks using UDPN infrastructure can manage, issue, and circulate a token-based central bank digital currency.” However, Red Date stated on its website that this use case is experimental as “there are not many CBDC examples in production around the world.”