The Universal Digital Payments Network looks to provide connectivity between business IT systems and regulated digital currencies. The Davos launch event saw representatives from a range of global financial institutions including Deutsche Bank, HSBC, Standard Chartered, The Bank of East Asia, and Akbank.
Representatives from financial institutions at the event discussed the changing world of digital currency and interoperability. The infrastructure required to support these developments was also discussed,
The digital currency payments project also launched its own ‘UDPN Sandbox’ in July 2022. Using the digital payments network sandbox, a number of banks have already begun testing transfers of stablecoins, CBDCs and foreign exchange transactions.
Multiple global banks are set to take part in a series of use case proofs-of-concept (POC) projects. The series aims to demonstrate how the UDPN can solve existing and future challenges. The challenges involve integrating digital currency into daily business, banking as well as payment scenarios.
The first POC projects involve global banks testing UDPN’s digital currency cross-border transfer and swap transaction capabilities. Banks will also look to highlight how the ‘Travel Rule’ can be implemented on the UDPN between two financial institutions for anonymous stablecoin transfers.
Interoperability for stablecoins
UDPN could reduce the cost of digital payments as well as accelerate adoption by banks and businesses. The network has been in development for over two years.
The UDPN was developed with contributions from global IT engineering and solutions provider GFT, Hong Kong-based decentralised cloud infrastructure company Red Date Technology, and TOKO, a digital asset creation engine delivered in collaboration with DLA Piper.
Marika Lulay, GFT on Digital Payments Network CBDCs
Marika Lulay, CEO of GFT, discussed the news. Lulay said: “The purpose of UDPN is to investigate a potential alternative to existing payments systems. It looks at enabling interoperability between fiat-backed tokens of stablecoins and regulated protocols. The decentralised approach and geographic breadth of participating firms, combined with the advanced technological solution deployed for these trials, set this network apart.”
The UDPN suggests that the future of money is digital, regulated and interoperable. An increasing amount of people and organisations recognise that today’s payments infrastructure has issues that can be solved. Digital money could make cross-border transactions simpler, cheaper and faster. It is also expected to eventually become integrated into the regulated financial system.