The Bank of Englands Digital Pound Lab is testing whether stablecoins and a potential digital British pound can operate within the same cross-border payment flow as part of an experiment focused on trade finance.
The experiment involves NOBO Finance, Dun & Bradstreet and Polygon Labs, with an exporter receiving an advance via a stablecoin rail while a UK importer completes settlement using simulated digital pounds, according to a Wednesday announcement from the three companies.
The project also includes a separate workstream aimed at creating reusable credit profiles for small businesses by combining transaction data, open-finance information and Dun & Bradstreets commercial risk data, with Polygon providing the smart contract infrastructure.
The test is aimed at reducing settlement delays and financing constraints for small- and medium-sized businesses engaged in cross-border trade. Exporters can wait days to receive payment after shipping goods, tying up working capital and making access to trade finance particularly important for smaller firms.
The Digital Pound Lab uses no real customers or money, and the Bank of England has not committed to issuing a digital pound. The central bank has said that participant-designed experiments in the lab should not be interpreted as indications of future bank policy or as endorsements of the companies or their products.
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UK pushes ahead with stablecoin, tokenization framework
The Digital Pound Lab experiment comes as UK regulators develop rules for stablecoins while preparing the countrys financial infrastructure for a broader shift toward tokenized assets.
In June, the Bank of England published draft rules for sterling-denominated stablecoins considered systemic to the UK financial system. The proposal allows issuers to hold as much as 70% of their reserves in interest-bearing government debt and introduces a temporary 40-billion-pound ($52.8 billion) issuance cap for each systemic stablecoin, replacing previously proposed limits on individual and business holdings.
The central bank aims to finalize the rules by the end of 2026 ahead of a planned 2027 rollout. Stablecoins deemed systemic, meaning their use is significant enough to potentially pose risks to UK financial stability, would fall under the Bank of England‘s regulatory regime, while non-systemic stablecoins would remain under the country’s Financial Conduct Authority.
Systemic stablecoins entail payments and retail-focused tokens. Source: Bank of England
The regulatory work is unfolding alongside efforts to modernize traditional payment infrastructure. In May, the BoE proposed moving its Real-Time Gross Settlement (RTGS) and Clearing House Automated Payments System (CHAPS) toward near-24/7 operation, including weekend and extended daily hours, in part to support cross-border payments and new settlement models as tokenization develops.
In July, the central bank also approved HSBC‘s Orion platform to operate in the UK’s Digital Securities Sandbox, where it is expected to support digital bond issuance, including the countrys planned Digital Gilt Instrument.
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