CBDCs: Roadmap to financial transformation
Yifan He, an expert in financial technologies, and CEO at Red Date Tech and Chief Architect of UDPN, delivered an insightful keynote at the AIBC Asia conference taking place at the SMX Convention Centre in Manila, addressing the critical need for Central Bank Digital Currencies (CBDCs) and underscoring the potential for transformative change in financial systems worldwide. As stakeholders navigate this dynamic terrain, He’s vision of efficient, interoperable digital currencies offers a roadmap for future development and adoption.
With a background in banking and spearheading groundbreaking projects like China’s national Blockchain People’s Structure (BSM) and China’s National Decentralized ID (DID) system, his expertise offers a compelling perspective on the trajectory of digital currency.
Here are the key takeaways from his speech:
Investment in tech powers economic growth
He emphasized the distinction between digital assets, such as cryptocurrencies and tokenized bonds, and regulated digital currencies designed for payments. He underscored the importance of efficiency in monetary circulation, highlighting how advancements in digital currency facilitate faster transactions, ultimately driving economic growth.
He elucidated on the two primary trends in digital currency: digital assets reliant on public exchanges and regulated digital currencies tailored for payments in a permissioned, centralized environment. Focusing on the latter, He discussed the significance of token-based digital currencies, contrasting them with traditional bank accounts. While bank accounts represent a form of centralized digital currency, token-based currencies offer decentralized alternatives aimed at enhancing efficiency and accessibility.
“Almost one third of the country’s central banks are doing research on regulated digital currency, it’s a direction that will definitely move forward.”
Within the realm of regulated digital currencies, He identified various categories, including retail and wholesale central bank digital currencies (CBDCs), tokenized deposits, ‘which will become a very large market next year’, and settlement tokens. He outlined the potential of wholesale settlement tokens in revolutionizing cross-border transactions, citing significant cost savings and liquidity benefits.
Treating retail CBDCs as digitalized cash
Meanwhile, He delved into the concept of tokenized deposits, highlighting their role in fostering interoperability between banks and streamlining payment processes. He emphasized the importance of treating retail CBDCs as digitalized cash, ensuring immediate settlement and user ownership—a vision that poses technical challenges but promises transformative benefits.
Addressing existing infrastructure gaps, He introduced the Universal Digital Payments Network (UDPN), a project aimed at connecting digital currency wallets akin to SWIFT in the traditional banking system. UDPN seeks to facilitate seamless communication between diverse digital currency accounts, fostering interoperability and efficiency, ‘a bridge to connect.’
They launched last year and are in the Beta testing phase right now.
Red Date Technology’s sandbox platform
The UDPN was established by Red Date Technology, recently unveiling the introduction of sandboxes designed specifically for commercial and central banks.
He concluded by urging stakeholders to prioritize feasibility and functionality in digital currency initiatives, advocating for rigorous testing and validation before widespread implementation. With Red Date Technology’s sandbox platform enabling central banks to experiment with various digital currency models, He emphasized the importance of informed decision-making to drive meaningful innovation.
