Polygon Joins Bank of England's Digital Pound Lab

Polygon Labs has joined Phase 2 of the Bank of England's Digital Pound Lab, testing whether stablecoins and a potential digital pound can work together in cross-border trade finance.

The initiative examines how different forms of digital money could settle within one transaction flow without forcing businesses onto disconnected payment rails.

Polygon will participate in cross-border settlement innovation trials where the exporter can settle through stablecoins, and the importer can settle via the digital pound.

This experiment is focused on fragmentation between bank money, stablecoins, tokenized deposits, and possible CBDCs. In the case where different types of money cannot settle each other effectively, firms can get into a liquidity trap, extra costs, and increase risks of the settlement process.