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China-Backed Blockchain Project Proposes SWIFT Alternative for Stablecoins and CBDCs – Finance Bitcoin News
The company developing China’s blockchain network wants to create a system for international settlements with stablecoins and government-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 China’s 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 (CBDCs) 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 the Universal Digital Payments Network (UDPN), will ensure interoperability between the two types of tokens.
The aim is to allow businesses from different countries to “trade and settle in different regulated digital currencies,” the UDPN white paper explains. Elaborating on its intentions, 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 new generation of CBDCs and stablecoins.
SWIFT, or Society for Worldwide Interbank Financial Telecommunication, is the most common system for interbank transfers globally. But it has been seen as a leverage for the West which, for example, cut off Russian banks from the network after Moscow’s invasion of Ukraine.
Both Russia and China have sought greater autonomy from SWIFT. Since 2014, the Russian government has developed its System for the Transmission of Financial Messages (SPFS), while in 2015 Beijing launched the Cross-Border Interbank Payment System (CIPS).
In addition, the People’s Bank of China issued a digital yuan, currently the most widely used CBDC with trials expanding in a number of regions. A digital ruble is in the works with the Russian Federation accelerating its launch plan amid Western sanctions.
Red Date said a number of global Tier 1 banks will participate in a series of proof-of-concept trials that will take place between January and June. They were not named specifically, but representatives of Deutsche Bank, HSBC, Standard Chartered and Bank of East Asia were present at the UDPN event.
The company launched BSN in 2020, along with state-owned telecom giant China Mobile, bank card clearing service Unionpay and the State Information Centre, a government think tank. The main purpose is to facilitate the implementation of blockchain in the company’s IT systems.
Do you think the new Chinese stablecoin and CBDC settlement platform will gain support among major banking institutions? Share your expectations in the comments section below.
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