Hong Kong-based Blockchain Project Proposes SWIFT-Like Platform for CBDCs and Stablecoins
Hong Kong-based Red Date Technology, who’s also designing China’s state-backed Blockchain-based Service Network (BSN) is now coming with a new project of building a SWIFT-like platform to facilitate cross-border payments and settlements using stablecoins as well as central bank digital currencies (CBDCs).
The company announced this initiative at the ongoing World Economic Forum (WEF) in Davos, Switzerland. Dubbed Universal Digital Payments Network (UDPN), this future platform seeks to establish interoperability between the two types of tokens.
The UDPN whitepaper goes to explain that the goal is to allow businesses from different countries to “transact and settle in different regulated digital currencies”. Explaining its intentions further, the government-backed firm wrote: “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”.
SWIFT - the Society for Worldwide Interbank Financial Telecommunication, is one of the most common systems for interbank transfers. However, as SWIFT failed to upgrade itself with newer technology, it has been facing a major challenge from blockchain-based platforms that can deliver similar results in the market.
Furthermore, economies like China and Russia are trying to break free from the SWIFT platform since it’s been largely dominated by the West. On the other hand, the People’s Bank of China (PBoC) has already launched its Digital Yuan in the market and is widely expanding its CBDC trails to a number of other regions. On the other hand, the Russian Federation is accelerating its schedule of launching the Digital Ruble in the market.
Red Date said that it plans to conduct a series of proof-of-concept trials which will take place between January and June. A umber of global Tier-1 banks are likely to participate in the trials.
Also, the stablecoins used in the proof-of-concept by UDPN remain undisclosed. But the white paper states that it would only support “CBDCs and regulated fiat-backed stablecoin currency systems as payment methods. No unregulated public-chain crypto-currencies, such as Bitcoin, will be accepted.”
Eight other POC tests are scheduled for the network that includes issuing and circulating a CBDC or a bank-issued stablecoin while using UDPN as a payment gateway for e-commerce.