The technical architect for China’s state-backed Blockchain-based Service Network (BSN) located in Hong Kong Red Date Technology has introduced the Universal Digital Payment Network (UDPN)
A statement by a financial stability advisor at the Federal Reserve Bank of New York on stablecoin and its connection with Central Bank Digital Currencies (CBDCs) may have sparked a flame in the minds of several global economies.
According to Antoine Martin, stablecoin may be the shortcut route for central banks of regions that plan to launch their CBDC. Today, Hong Kong seems to be on that trail.
The UDPN is one of the ways to bootstrap the emergence of CBDCs. This blockchain-based network was launched on Thursday, January 19th at the World Economic Forum (WEF) 2023 meeting which was held in Davos, Switzerland.
SWIFT for Banks, UDPN for Stablecoins and CBDCs
Different innovators worked to bring the UDPN project to life. Apart from Red Date Technology, German digital consultancy GFT and DLA Piper’s digital asset initiative TOKO were also major contributors to the actualization of the UDPN project.
UDPN is directed towards bridging the gap between stablecoins and CBDCs, that is, to provide interoperability between both entities. The function of the UDPN was likened to that of the SWIFT network for banks.
“The purpose of UDPN is to investigate a potential alternative to existing payments systems by enabling interoperability between fiat-backed tokens of stablecoins and regulated protocols,” Marika Lulay, the Chief Executive Officer (CEO) of GFT explained “The decentralised approach and geographic breadth of participating firms, combined with the advanced technological solution deployed for these trials, set this network apart.”
“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 whitepaper detailed.
Already, a few global top-tier banks have been listed to participate in the use-case proof of concepts (POCs) to test the network in cross-border transfers and swaps. The names of the participating banks were not disclosed, however, Deutsche Bank, HSBC, Standard Chartered, The Bank of East Asia, and Akbank were all represented as panellists at the UDPN launch in Davos.
Meanwhile, the People’s Bank of China (PBoC) has launched a pilot test wallet for its CBDC e-CNY. The wallet is now available on both Apple Store for iOS users and Google Play Store for Android users.