Bank of England Tests Stablecoins and Digital Pound in One Trade-Finance Flow

The Bank of England is testing how stablecoins and a digital pound can work together in a single trade-finance payment flow, moving its digital pound project into Phase 2 with partners NOBO Finance, Dun & Bradstreet and Polygon Labs, the bank announced Wednesday.

Interoperability, Not Replacement

The experiments are the first time the Digital Pound Lab has tested whether public stablecoin infrastructure and central bank money can coexist in one payment flow, alongside a portable credit identity for small businesses. For digital money to actually move the world's trade, its different forms have to work together — public and private, central bank money and stablecoins, said Polygon Labs CEO Marc Boiron. The lab uses no real customers or money and does not signal any decision to issue a digital pound.

Two Workstreams

The first workstream builds an SME bankable profile: NOBO, Dun & Bradstreet and Polygon plan to combine wallet transaction data, open-finance information and business intelligence into a reusable credit assessment, with Polygon smart contracts recording the verified outcome and managing consent. The second experiments with invoice factoring backed by electronic bills of lading — an exporter receives an advance through stablecoin technology, while a UK importer makes final settlement in digital pounds. Polygon is providing settlement infrastructure through its Open Money Stack, including fiat-to-stablecoin conversion, wallets and smart contracts.

Cross-border SME trade finance is still slowed by fragmented verification, manual checks, and settlement that can take days — for small businesses, the gap between shipping goods and receiving payment is frozen capital, the group said. Findings will feed into the Bank of England and Treasury's joint assessment of the digital pound ahead of next steps later this year.