Stablecoins and state-issued digital currencies will be used to build a system for international transactions, according to the business building China’s blockchain network. The idea is to create a platform that makes it easier to use these two fiat-based digital currencies for international trade.
Company Behind China’s Blockchain Push Aims to Make Stablecoins and State Coins Interoperable
Red Date Technology, based in Hong Kong, is the company behind China’s state-backed Blockchain-based Service Network (BSN), and it just unveiled a new project to integrate both stablecoins and central bank digital currencies (CBDCs) into international transactions.
The World Economic Forum (WEF) in Davos, Switzerland, where the project was unveiled this week, according to the South China Morning Post. The interoperability between the two types of tokens should be guaranteed by the next platform, known as the Universal Digital Payments Network (UDPN).
According to the UDPN whitepaper, the objective is to enable firms from many nations to “transact and settle in different regulated digital currencies.” In a statement explaining its goals in further detail, the government-backed company wrote:
The UDPN will serve the same purpose for the upcoming generation of CBDCs and stablecoins, just as the SWIFT network established the initial universal standard for messaging between financial institutions across various settlement systems.
The most widely used system for interbank transactions worldwide is SWIFT, or the Society for Worldwide Interbank Financial Telecommunication. However, it has been perceived as a tool for the West, which used it, for instance, to cut off Russian banks from the network when Moscow invaded Ukraine.
Greater independence from SWIFT has been sought by both China and Russia. Beijing created the Cross-Border Interbank Payment System in 2015, while the Russian government has been building its System for Transfer of Financial Messages (SPFS) since 2014. (CIPS).
According to Red Date, several international Tier 1 banks will take part in several proof-of-concept trials between January and June. Representatives from Deutsche Bank, HSBC, Standard Chartered, and the Bank of East Asia were present at the UDPN event, albeit it did not specifically mention them.
Together with the state-owned telecom behemoth China Mobile, the bank-card clearing provider Unionpay, and the State Information Centre, a think tank, the business launched BSN in 2020. Its main objective is to make it easier to integrate blockchain technology into enterprise IT systems.