A Chinese company developing a blockchain network wants to create a system for international payments in stable coins and state-issued digital currencies. The plan is to establish a platform that facilitates the use of these two fiat-based digital assets in foreign trade.
Companies behind China’s blockchain push aim to interoperate between stabled coins and state coins
Red Date Technology of Hong Kong, the architect of China’s state-backed blockchain-based services network (BSN), has launched a new project to implement both stablecoin and central bank digital currency (CBDC) for cross-border payments
The initiative was presented this week at the World Economic Forum (WEF) in Davos, Switzerland, the South China Morning Post reported. The future platform, called the Universal Digital Payment Network (UDPN), should ensure interoperability between the two types of tokens.
The goal, the UDPN white paper explains, is to allow businesses in different countries to “trade and settle in different regulated digital currencies.” Elaborating further on its intent, the government-backed company writes:
Just as the SWIFT network created the original common standard for messaging between financial institutions across different payment systems, the UDPN will serve the same purpose for emerging generation CBDCs and stablecoins.
SWIFT (Society for Worldwide Interbank Financial Telecommunications) is the most common system worldwide for interbank transfers. However, it has been seen as leverage for Western countries that have cut Russian banks off from the network, for example, in the wake of Moscow’s invasion of Ukraine.
Both Russia and China are seeking greater autonomy from SWIFT: since 2014, the Russian government has developed the System for the Transfer of Financial Messages (SPFS), and in 2015 Beijing launched the Cross-border Interbank Payment System (CIPS).
In addition, the People’s Bank of China has issued a digital renminbi, currently the most widely used CBDC, with widespread trials in many regions. Preparations for the digital ruble are underway, with the Russian Federation accelerating its launch schedule amid Western sanctions.
Red Date announced that a number of global Tier 1 banks will participate in a series of proof-of-concept trials that will take place between January and June. Although not specifically named, representatives from Deutsche Bank, HSBC, Standard Chartered, and Bank of East Asia were present at the UDPN event.
The BSN was launched in 2020 along with state-owned telecommunications giant China Mobile, bank card payment service UnionPay, and government think tank National Information Center. Its main objective is to promote the adoption of blockchain in enterprise IT systems.
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