Bank of England Tests Stablecoins in Cross-Border Payments Experiment

The Bank of England is conducting an experiment to test whether stablecoins and a potential digital pound can work together in cross-border payments. The test, part of Phase 2 of the Digital Pound Lab, brings together Polygon Labs, NOBO Finance, and Dun & Bradstreet to examine trade finance for small and medium-sized businesses.

The focus is on testing an invoice-factoring structure where a UK or international exporter can receive an advance funded using stablecoins. The UK importer can subsequently settle the final obligation using a simulated digital pound.

The broader objective is to reduce friction in trade finance, where smaller companies struggle with expensive financing, fragmented documentation, and lengthy international settlement processes.