Bank of England Trials Stablecoin and Digital Pound for Cross-Border Payments

The Bank of England’s Digital Pound Lab is running a new experiment that tests whether stablecoins—and a notional digital British pound—could work together inside the same cross-border trade payment flow. The project is designed to show how payment and settlement could be connected to trade finance in a way that reduces the delays and cash-flow pressure that small and medium-sized businesses often face.

According to an announcement from the project participants, the trial involves NOBO Finance, Dun & Bradstreet and Polygon Labs. In the setup, an exporter receives an advance through a stablecoin-based “rail,” while a UK importer completes settlement using simulated digital pounds—without using real customers or real money.

Key takeaways

• The Digital Pound Lab experiment tests stablecoin rails alongside simulated digital pounds in a single cross-border trade settlement flow.
• NOBO Finance, Dun & Bradstreet and Polygon Labs are collaborating, with Polygon providing smart contract infrastructure.
• A second workstream focuses on generating reusable credit profiles for small businesses using transaction data and open-finance inputs.
• The Bank of England has not committed to issuing a digital pound, and lab tests are not intended as signals of future policy.

How the trade finance pilot is meant to work

The core concept targets a structural problem in international trade: payment timing. When exporters ship goods before receiving full payment, they may have to wait days to be paid, tying up working capital. That delay can make trade finance harder to access—particularly for smaller firms that may lack established lines of credit.

In the lab’s proposed flow, the exporter receives an advance via a stablecoin pathway, while the importer performs settlement through simulated digital pounds. The pairing is intended to demonstrate how stablecoin-based payment mechanics could coexist with a central-bank-style settlement layer, at least in a controlled testing environment.

The experiment is also designed to be realistic in terms of participants’ roles: it is built around trade finance and settlement processes rather than a generic token transfer scenario. That distinction matters because trade finance depends on paperwork, counterparty assessment and timing—factors that can be difficult to model in simple demonstrations.

Building blocks beyond payments: credit profiles for SMEs

The project does not stop at moving value. It includes a separate workstream intended to improve how small businesses are assessed for credit, by creating reusable credit profiles.

As described in the announcement, that credit-profile effort combines transaction data, open-finance information and Dun & Bradstreet’s commercial risk data. Polygon Labs is contributing smart contract infrastructure for the overall system, which suggests the test may explore whether on-chain logic can help standardize or reuse parts of the credit assessment process rather than rebuilding them from scratch for every transaction.

For investors and builders, the value of this component is that trade finance bottlenecks are often caused by more than settlement latency. Information asymmetry and rigid underwriting cycles can restrict financing even when payment rails are upgraded. By aiming at “reusable” profiles, the project appears to target a way to shorten the time between data availability and a credit decision—though the outcomes of that part of the work are not yet detailed.

Why regulators and central banks are watching stablecoins and tokenized payments

The Bank of England’s experiment lands in the middle of broader regulatory and infrastructure work in the UK. The central bank and other regulators are preparing for stablecoins and tokenized assets, while also modernizing the plumbing behind traditional payment settlement.

Earlier this year, the Bank of England published draft rules for sterling-denominated stablecoins it considers systemic to the UK financial system. According to the central bank’s proposal referenced in the report, issuers could hold up to 70% of their reserves in interest-bearing government debt, and the framework introduces a temporary issuance cap of 40 billion pounds (about $52.8 billion) for each systemic stablecoin.

The policy timeline included in the article points to potential finalization by the end of 2026, ahead of a planned 2027 rollout. Stablecoins deemed “systemic” would fall under the Bank of England’s regulatory regime, while non-systemic stablecoins would remain under the Financial Conduct Authority.

That split between systemic and non-systemic tokens is an important practical detail for market participants. It implies that not every stablecoin would be treated the same way, and that compliance requirements could vary depending on how widely a token is used and how much it matters to financial stability. For developers, it also suggests that designs and reserve structures may need to be aligned with which regulatory lane a token is likely to occupy.

The lab’s trade test is also tied to the UK’s wider push to upgrade settlement speed and flexibility. In May, the Bank of England proposed moving its RTGS and CHAPS systems toward near-24/7 operation, including weekend and extended daily hours—an effort framed as support for cross-border payments and evolving settlement models that could incorporate tokenization.

In July, the central bank also approved HSBC’s Orion platform to operate in the UK’s Digital Securities Sandbox. The article notes that Orion is expected to support digital bond issuance, including the country’s planned Digital Gilt Instrument. While that is separate from stablecoin rules, it reinforces the theme that UK authorities are testing tokenized approaches across multiple asset types, not only payments.

What the Digital Pound Lab trial does—and does not—indicate

Even as the experiment explores stablecoin rails and simulated digital pound settlement, the Bank of England is explicit that the Digital Pound Lab uses no real customers or money and that it has not committed to issuing a digital pound.

The central bank also cautions that participant-designed experiments in the lab should not be interpreted as indications of future policy or as endorsements of the companies or products involved. In practice, that means readers should treat the pilot as proof-of-concept work: useful for identifying technical and process challenges, but not a guarantee of a specific eventual product roadmap.

What to watch next is whether the project can demonstrate measurable improvements—such as reduced settlement delays, more efficient financing workflows, or faster credit assessment cycles—within its controlled environment. Since the announcement does not provide results or performance metrics yet, the most immediate signal will come from any follow-on reporting from the lab on what worked, what failed, and which regulatory assumptions were necessary for the trial design.