The Swift of stablecoins and central bank digital currencies is what China's government-backed blockchain project aims to be
The Swift of stablecoins and central bank digital currencies is what China's government-backed blockchain project aims to be
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Beijing: Red Debt Technology, a Hong Kong-based company serving as the technical architect for China's government-backed blockchain-based service network (BSN), has unveiled a new initiative aimed at stablecoins and central bank digital currencies (CBDS). CBDC) have to interoperate. To facilitate international transactions.

On Thursday at the World Economic Forum in Davos, Red Date announced that a new project called the Universal Digital Payments Network (UDPN) has begun.

According to the UDPN whitepaper, it aims to enable businesses from different countries to “transact and settle in a variety of regulated digital currencies.”

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According to the company paper, UDPN will serve a similar function for the upcoming generation of CBDCs and stable coins. “Just as the SWIFT network created the original common standard for messaging between financial institutions across different settlement systems,” the paper said.

The most popular method of transferring money between banks around the world is called SWIFT (Society for Worldwide Interbank Financial Telecommunication).

Because stablecoins are tied to a particular currency or a basket of currencies, some see them as an easy way to avoid using SWIFT.

Red Date reports that from January to June, several “global Tier 1 banks” will participate in a series of proof-of-concept trials where they will investigate how UDPN can be used to “integrate digital currency into daily business, banking.” addresses the issues. and payment scenario".

The names of the banks were kept secret by Red Date. However, at the UDPN launch event, representatives from foreign banks such as Deutsche Bank, Hong Kong and Shanghai Banking Corporation (HSBC), Standard Chartered and Bank of East Asia participated in a panel discussion with Red Date.

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According to the project's official website, one of UDPN's proof-of-concept trials looks at a CBDC and examines how "two commercial banks using UDPN infrastructure manage a token-based central bank digital currency, issued and can operate.

However, Red Date states on its website that this use case is more experimental than the others "as there are not many CBDC examples in production worldwide."

The paper makes no reference to the eCNY, the digital yuan, or China's own CBDC. eCNY has emerged as the most widely used CBDC in a major economy as China expanded trials to multiple cities across the country.

Beijing is still looking for actions that might encourage capital flight, though. The use of cryptocurrencies, including stable coins, has been outlawed by the government as it views them as a threat to the financial system.

However, China has aimed for greater independence from the SWIFT network, introducing its rival Cross-Border Interbank Payment System (CIPS) in 2015. Swift is being criticized partly because it could be used as a weapon by Western governments, as it did when Russia was cut off from the network following its invasion of Ukraine.

Beijing has expressed support for the progress of blockchain technology over the past few years, but its pace has been slow. It is unclear whether blockchain technology is involved in the distribution of eCNY as it is not used to manage it.

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Red Date, China Mobile, UnionPay, a state-owned telecommunications company, and the State Information Center, a government think tank under the National Development and Reform Commission, jointly launched the BSN in 2020.

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