Bank of England’s Digital Pound Move: Stablecoins in the Same Payment Flow

The Bank of England has begun testing whether stablecoins and the potential digital pound can function within the same flow for cross-border trade payments.

The Bank of England (BoE) is moving its digital pound initiatives to the second phase, examining the integration of stablecoins issued by private companies with central bank money in the same payment process. The study aims to facilitate access to trade finance for small businesses by accelerating verification and settlement processes, which currently cause payments to pend for days. The BoE has been working on central bank digital currency and distributed ledger technology since 2024.

NOBO Finance, business data and credit rating company Dun & Bradstreet, and Polygon Labs will join the BoE’s Digital Pound Lab. The project will be the first study to test stablecoin infrastructure and central bank money in the same payment flow with a portable credit identity for small businesses. No real customers or money will be used in the trial; this step does not imply that a digital pound will be issued.

BoE to test stablecoins and digital pound in the same payment flow

In the first study, the parties will combine wallet transactions, open finance data, and commercial information to create a reusable credit profile. This profile will help businesses prove their creditworthiness. Polygon will use smart contracts to record results and manage data sharing permissions. In the first phase, NOBO demonstrated conditional business-to-business escrow payments in trade finance.

The other study will test invoice financing supported by electronic bills of lading. While the exporter receives early payment via stablecoin, the importer in the UK will make the final payment with the digital pound. Polygon will provide wallet services, fiat-to-stablecoin conversion, and payment infrastructure through Open Money Stack. The findings will be used in the BoE and Treasury’s digital pound assessment later this year.