The Bank of England, through the Digital Pound Lab, is testing whether stablecoins and the potential digital British pound could operate within a single payments track for cross-border payments, as part of an experiment focused on trade financing.
According to a statement from the participating companies, the trial includes NOBO Finance, Dun & Bradstreet, and Polygon Labs. In this scenario, the exporter receives an advance payment via a track based on a stablecoin, while the importer in the UK completes settlement using simulated digital pounds.
The core idea here is not to launch a ready-made commercial product, but to test how to coordinate multiple layers of payment and settlement within the process itself. This kind of experiment matters because international trade financing often involves multiple parties, documents, and waiting periods that can last days before payment is completed after the goods are shipped.
The participating entities say the goal is to reduce settlement delays and financing constraints faced by small and medium-sized companies operating in cross-border trade. The longer the exporter has to wait for payment, the longer working capital remains tied up, making access to trade finance especially important for this group of companies.
Alongside the payment flow itself, the project includes a separate workflow aimed at creating reusable credit files for small businesses by integrating transaction data, open finance information, and commercial risk data from Dun & Bradstreet. Polygon provides the smart contract infrastructure for this part of the experiment.
It is important to note that the Digital Pound Lab does not use real customers or real money, and the Bank of England has not yet committed to issuing a digital pound. The bank previously explained that experiments led by participants inside the lab should not be viewed as an indicator of the bank’s future policy, nor as an endorsement of the participating companies or their products.
This experiment comes at a time when regulators in the UK are working on developing rules for stablecoins, alongside updating the traditional financial infrastructure in preparation for a broader shift toward tokenized assets.
In June, the Bank of England published a draft set of rules for sterling-backed stablecoins that could be systemically important for the UK financial system. The draft proposes allowing issuers to hold up to 70% of their reserves in interest-bearing government debt, with a temporary issuance cap of £40 billion per systemically important stablecoin, instead of the previously proposed limits on individuals’ and companies’ holdings.
The bank aims to finalize the rules by the end of 2026, paving the way for a planned rollout in 2027. Systemically important stablecoins—those whose use could reach a level that threatens financial stability in the UK—will be subject to the Bank of England’s regulatory framework, while non-systemic stablecoins will remain under the oversight of the Financial Conduct Authority.
At the same time, the bank is working to update traditional payment systems. In May, it proposed moving the RTGS and CHAPS systems toward near-continuous operation around the clock, including weekend holidays and extended daily hours, to support cross-border payments and new settlement models as tokenization evolves.
Also in July, the bank approved HSBC Orion to run on the UK’s Digital Securities Sandbox. It is expected to support the issuance of digital bonds, including the Digital Gilt Instrument planned for the country.
Overall, this experiment reflects a practical effort to understand how a digital pound and stablecoins could work together within a single payment flow, and whether such integration could open the door to faster and more flexible settlements in international trade in the future.