A mechanism that will enable communication between stablecoins, central bank digital currencies (CBDCs), and blockchain-based transactions is being tested by Deutsche Bank and Standard Chartered’s SC Ventures. The Universal Digital Payments Network (UDPN), a permission blockchain system made up of validator nodes managed by a consortium of banks, financial institutions, and consultants, is being used by the banks for test purposes. The system allows transactions to take place across a variety of networks, including stablecoins on public blockchains and CBDCs. It was developed by IT consultant GFT Group and Red Date Technology, a co-founder of the Chinese Blockchain-Based Service Network (BSN).
In addition to providing users with decentralized digital identity standards (DIDs), the UDPN serves as an interoperability bridge across different kinds of blockchain networks, enabling a regulated and bank-friendly environment. Approximately twenty-five organizations, including banks from the United States, Australia, Latin America, and Europe, are presently part of the network, which is conducting ten proof-of-concept tests concurrently. According to Thorsten Neumann, CTO of SC Ventures, in order to execute a cross-border currency transfer, the sending institution takes the tokenized value and transfers it into a smart contract run by the UDPN. The smart contract then releases the intended destination currency.