TL;DR
- Bank of England’s Digital Pound Lab entered Phase 2 to test stablecoins and a potential digital pound together in cross-border trade finance.
- NOBO Finance, Dun & Bradstreet and Polygon Labs will explore reusable SME credit profiles, invoice factoring, electronic bills of lading and stablecoin settlement infrastructure.
- The experiments use no customers or money and do not signal a decision to issue a digital pound, but findings will inform BOE and Treasury.
The Bank of England is moving its digital pound exploration into a second phase, testing whether stablecoins and potential central bank digital money can work together in cross-border trade finance. The experiment will examine a single payment flow in which an exporter receives an advance through stablecoin technology while a UK importer settles in digital pounds. The intriguing shift is that the BOE is no longer studying digital currencies only in isolation, but testing how public and private forms of money might interact. The work remains experimental, using no real customers or funds.
Digital pound tests bring stablecoins deeper into trade finance
The Digital Pound Lab will work with NOBO Finance, Dun & Bradstreet and Polygon Labs on two connected workstreams. One will create a reusable credit profile for small and medium-sized businesses by combining wallet transaction data, open-finance information and business intelligence. Polygon will supply smart contracts to record verified outcomes and manage consent. The project turns digital identity into part of the payments experiment, not merely an administrative add-on. That matters because trade-finance delays can make it harder for smaller companies to prove creditworthiness, secure funding and unlock working capital after shipping goods. This matters operationally.
A second workstream will test invoice factoring backed by electronic bills of lading. Polygon plans to provide stablecoin settlement infrastructure through its Open Money Stack, including fiat-to-stablecoin conversion, wallets and smart contracts. The model is designed to test whether different forms of digital money can share one settlement process without forcing businesses onto a single financial rail. The BOE’s first phase had already explored conditional business-to-business escrow payments, while Phase 2 extends the experiment toward interoperability between stablecoins, central bank money and portable credit information for cross-border commerce. That could simplify coordination across providers.
The findings will feed into a joint Bank of England and Treasury assessment of the digital pound before further steps later this year. Importantly, participation in the lab does not mean the UK has decided to issue a digital pound. The experiment is therefore about infrastructure choices before policy commitment, testing what modern finance could require if digital money becomes more interconnected. For small businesses, the practical question is whether faster verification and settlement can reduce the period when capital remains tied up between shipping goods and receiving payment, while preserving compatibility across public and central bank systems.
