BOE Tests Stablecoin-Digital Pound Trade Finance With Polygon

The Bank of England is testing whether stablecoins and a digital pound can operate together in a single payment flow, adding NOBO Finance, Dun & Bradstreet, and Polygon Labs to its Digital Pound Lab for a new trade-finance experiment announced Wednesday. The project examines how public stablecoin infrastructure and central bank money might coexist to modernize cross-border trade finance, a segment central banks worldwide are racing to understand as private stablecoins and potential state-issued digital currencies both expand.

Building a Reusable Credit Profile for SMEs

At the center of the experiment is a push to speed up trade finance for small and medium-sized businesses, which often struggle to prove creditworthiness quickly enough to access working capital. Otto Jacobsson, U.K. chapter lead at the Digital Assets Association, said in an interview that faster, more efficient trade-finance processes could let U.K. businesses unlock working capital sooner and simplify financing international trade. The consortium’s first workstream will combine wallet transaction data, open-finance information, and business intelligence from Dun & Bradstreet, a global provider of business decisioning and credit-rating data, into a reusable SME “bankable profile.” Polygon Labs will supply the smart contracts that record the verified outcome and manage consent for how that data gets used.

NOBO Finance, a U.K.-based fintech building digital trade finance infrastructure for SMEs, already participated in Phase 1 of the Digital Pound Lab, where it helped demonstrate conditional business-to-business escrow payments relevant to trade workflows. The Digital Pound Lab launched in August 2025 and has run in two phases: an initial three-month phase focused on Bank-defined use cases, followed by a broader nine-month phase open to a wider set of participating organizations through July 2026.

Testing Invoice Factoring Across Two Forms of Money

The group’s second workstream will test invoice factoring backed by electronic bills of lading, structuring transactions so an exporter receives an advance through stablecoin technology while a U.K. importer completes final settlement in a potential digital pound. Polygon will provide the underlying stablecoin settlement infrastructure through its Open Money Stack, including fiat-to-stablecoin conversion, wallets, and smart contracts. “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,” Polygon Labs CEO Marc Boiron said in a statement. “This experiment tests exactly that.”

The Digital Pound Lab uses no real customers or real money, and the Bank of England has repeatedly stressed that participation in the Lab does not signal any decision to issue a digital pound. The Bank finalized its broader stablecoin regulatory framework in June 2026, setting an initial issuance limit of £40 billion per token and permitting issuers to hold up to 70% of reserves in short-term government debt, up from a 60% limit proposed earlier.

• Findings from the trade-finance experiment will feed into a joint assessment by the Bank of England and HM Treasury on the digital pound’s next steps, expected later this year
• The Bank and Financial Conduct Authority separately run a Digital Securities Sandbox, where 16 companies including HSBC and Euroclear were preparing tokenized asset launches as of late 2026

Conclusion

The experiment tests a genuinely unresolved question in central banking: whether public stablecoins and central bank digital currency need to compete for the same payment rails, or whether they can interoperate within a single transaction. “Cross-border SME trade finance is still slowed by fragmented verification, manual checks, and settlement that can take days,” the consortium said in its statement, framing the gap between shipping goods and receiving payment as frozen capital for small exporters. Whether that interoperability model works in practice, rather than just in a controlled lab with no real money, will shape how the Bank and Treasury approach the broader digital pound decision expected later this year.