According to CoinDesk, Deutsche Bank and Standard Chartered's SC Ventures are testing a system that will allow blockchain-based transactions, stablecoins, and central bank digital currencies (CBDCs) to communicate with one another. The banks are running test cases on the Universal Digital Payments Network (UDPN), a permissioned blockchain system composed of validator nodes run by an alliance of banks, financial institutions, and consultancies. The system, created by tech consultancy GFT Group and Red Date Technology, co-founder of the Chinese Blockchain-Based Service Network (BSN), enables transactions to occur across a range of networks, from stablecoins on public blockchains to CBDCs.
The UDPN acts as an interoperability bridge between various types of blockchain networks while also applying decentralized digital identity standards (DIDs) to participants, allowing for a bank-friendly and regulated environment. The network currently comprises about 25 organizations, including banks from the U.S, Australia, Latin America, and Europe, running around ten proof-of-concept tests in parallel. When carrying out a cross-border currency transfer, the sending institution takes the tokenized value and transfers it into a smart contract managed by the UDPN, which then releases the intended target currency from that smart contract, according to Thorsten Neumann, CTO of SC Ventures. The UDPN's transaction nodes are connected to currency systems and currency pools, enabling transactions and operations with CBDCs or other financial institutions in a regulated environment, said Steffen Schacher, UDPN lead at GFT Group.
