Bank of England puts stablecoins and a digital pound in the same payment flow [Phase 2]

The Bank of England isn’t asking whether stablecoins or a central bank digital currency wins. It’s testing whether both can sit inside one payment, for one invoice, at the same time.

That’s the actual news out of the BOE’s move into Phase 2 of its digital pound exploration, announced Wednesday. Public stablecoin infrastructure on one side, central bank money on the other, and a trade finance transaction running through the middle.

What Phase 2 actually does differently

The BOE has been poking at a CBDC and the distributed ledger technology underneath blockchains since 2024. Phase 2 narrows that to something more specific and more testable: can public stablecoin rails and central bank money coexist in a single payment flow for trade finance?

This is the first time the Digital Pound Lab has tried it. And it’s the first time the lab has paired that experiment with a portable credit identity for small businesses.

Worth being blunt about the limits. The lab uses no real customers and no real money. It doesn’t signal any decision to issue a digital pound. This is a sandbox, not a launch.

Who’s in the room

The BOE named NOBO Finance, Dun & Bradstreet and Polygon Labs as participants. Dun & Bradstreet is a global provider of business decisioning data, analytics and credit-rating services. Polygon Labs is a software and blockchain company.

NOBO is a U.K.-based fintech building digital trade finance infrastructure meant to help small and medium-sized enterprises become visible, verifiable and bankable. It was already in Phase 1, where it helped demonstrate conditional business-to-business escrow payments relevant to trade finance workflows.

The frozen capital problem

The reason any of this matters to a business owner rather than a policy desk comes down to timing.

“Cross-border SME trade finance is still slowed by fragmented verification, manual checks, and settlement that can take days,” the group said in a statement. “For small businesses, the gap between shipping goods and receiving payment is frozen capital.”

Otto Jacobsson, U.K. chapter lead at the Digital Assets Association, framed the same gap as a creditworthiness problem. Trade finance delays make it harder for smaller firms to prove they’re good for the money and to access funding, Jacobsson said.

“If these processes can become faster and more efficient, U.K. businesses could unlock working capital sooner and make it easier to finance international trade,” Jacobsson said in an interview over LinkedIn.

Two workstreams, one of them genuinely interesting

The first builds an SME “bankable profile.” NOBO, Dun & Bradstreet and Polygon plan to combine wallet transaction data, open-finance information and business intelligence into a reusable credit assessment. Polygon will supply smart contracts to record the verified outcome and manage consent.

The second is the one that tests the thesis. The group will experiment with invoice factoring backed by electronic bills of lading. An exporter receives an advance through stablecoin technology. A U.K. importer makes final settlement in digital pounds.

Same transaction. Two different kinds of money. That’s the whole point.

Polygon’s pitch, and what it’s actually supplying

“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,” Marc Boiron, CEO of Polygon Labs, said in the statement. “This experiment tests exactly that.”

Boiron’s company said it will provide the stablecoin settlement infrastructure through its Open Money Stack, including fiat-to-stablecoin conversion, wallets and smart contracts.

Take that framing with the appropriate amount of salt. A blockchain company arguing that blockchains belong in central bank plumbing is not a neutral observation. But the technical contribution is concrete enough to evaluate on its own terms.

The question underneath the question

Central banks everywhere are working out how to regulate private stablecoins, crypto tokens whose value is pegged to a fiat currency, alongside potential state-issued digital versions of their own currencies.

Most of that debate gets framed as a contest. The BOE’s experiment reframes it: can different forms of digital money interoperate, rather than forcing companies and customers onto a single payment infrastructure?

What to watch for

The findings feed into the BOE and the Treasury’s joint assessment of the digital pound ahead of its next steps later this year.

If you’re an SME exporter waiting on payment, don’t change anything yet. Watch that joint assessment instead. Whether the exporter-gets-stablecoin, importer-pays-digital-pound handoff survives contact with real settlement is the detail that tells you if any of this leaves the lab.