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The company developing China’s blockchain network wants to create a system of international settlements with stablecoins 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.
The company behind Chinas Blockchain Push aims to make stablecoins and state coins interoperable
Hong Kong-based Red Date Technology, the designer of China’s state-backed blockchain-based service network (BSN), has launched a new project to implement both stablecoins and central bank digital currencies (CBDC) in cross-border payments.
The initiative was announced this week at the World Economic Forum (WEF) in Davos, Switzerland, the South China Morning Post reported. The future platform, called Universal Digital Payments Network (UDPN), should ensure interoperability between the two types of tokens.
The aim is to allow companies from different countries to transact and settle in different regulated digital currencies, the UDPN white paper explains. Further clarifying its intentions, the government-backed company wrote:
Just as the SWIFT network created the original common standard for messaging between financial institutions across different settlement systems, UDPN will serve the same purpose for the emerging generation of CBDCs and stablecoins.
SWIFT, or Society for Worldwide Interbank Financial Telecommunication, is the most common system for interbank transfers in the world. But it was seen as leverage for the West, which, for example, cut Russian banks off the grid following Moscow’s invasion of Ukraine.
Russia and China have sought greater autonomy from SWIFT. Since 2014, the Russian government has been developing its Financial Message Transfer System (SPFS) while in 2015, Beijing launched the Cross-Border Interbank Payment System (CIPS).
Additionally, the People’s Bank of China has issued a digital yuan, currently the most widely used CBDC with expanding trials in a number of regions. A digital ruble is in the works, with the Russian Federation accelerating the timetable for its launch despite Western sanctions.
Red Date said a number of Tier 1 global banks will participate in a series of proof-of-concept trials that will take place between January and June. He did not specifically name them, but representatives from Deutsche Bank, HSBC, Standard Chartered and the Bank of East Asia were present at the UDPN event.
The company launched BSN in 2020, working with state-owned telecom giant China Mobile, bank card clearing service Unionpay and the State Information Center, a government think tank. Its main objective is to facilitate the implementation of blockchain in the IT systems of companies.
Tags in this story Alternative, Bank, banks, Blockchain, Blockchain Project, CBDC, CBDC, China, Chinese, CIP, cross-border, Digital currencies, foreign trade, Interbank, international, Payments, Red Date, Regulations, SPFS, Stablecoins, Swift
Do you think the new Chinese platform for stablecoin and CBDC settlements will win the support of major banking institutions? Share your expectations in the comments section below.
Lubomir Tassev
Image credits: Shutterstock, Pixabay, Wiki Commons
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