Universal Digital Payments Network launches in Davos

This new offering for digital payments was designed to support interoperability between regulated stablecoins and central bank digital currencies (CBDCs). The offering debuted at the World Economic Forum (WEF) 2023 conference in Davos, Switzerland, and it aims to minimise the cost of digital payments while accelerating the adoption of digital currency by banks and businesses of various sizes. 

Before the official launch, during the development phase, banks were able to test stablecoin transfer and swap (FX) transactions in a sandbox put together in July 2022. The partnership between the three aforementioned companies will also result in a series of use cases proof-of-concept (POC) studies. These studies will explore the use of UDPN for solving existing and future challenges of blending digital currency with daily business, payment setups, and banking. 

In the first phases of the POC studies, two banks will test the digital currency international transfer and swap transaction capabilities of the Universal Digital Payments Network. They will also test the travel rule feature and how it can enable financial institutions to implement anonymous stablecoin transfers.

UDPN’s main features

An official UDPN white paper details some of the system’s main features and focus points: 

• UDPN offers a common standard for messaging across different digital currency systems, allowing interoperability functions between CBDC and stablecoin ecosystems. 
• It has the ability to provide core digital infrastructure services to any IT system that can offer applications and services involving digital currency payments. It’s also worth noting that the UDPN does not serve individual end users directly. 
• The network will support only CBDCs and regulated fiat-backed stablecoin currency systems as payment methods. No unregulated public-chain cryptocurrencies, such as Bitcoin, will be accepted. The addition of any new currency is subject to a vote by the UDPN Alliance members as part of the network’s decentralised governance approach. 
• The UDPN does not provide custodial services, nor does it hold or move any digital currencies. 
• The UDPN has been designed for CBDCs and stablecoins. However, it could technically be extended to support messaging with traditional messaging systems. 

GFT officials cited by electronicpaymentsinternational.com explained UDPN’s purpose and highlighted that it can represent a potential alternative to existing payments systems. According to the same source, what makes UDPN stand out is that it has the capability to enable interoperability between fiat-backed tokens of stablecoins and regulated protocols.