Bank of England Tests Digital Pounds in Trade Finance with Polygon Labs
The Bank of England has partnered with Polygon Labs and other companies to test the use of digital pounds in trade finance. The partnership, part of the central bank's Digital Pound Lab program, aims to develop a reusable SME credit profile that combines transaction data, business intelligence, and blockchain-based smart contracts.
NOBO Finance, Dun & Bradstreet, and Polygon Labs will work together on two connected workstreams within the program. One will focus on developing an SME Bankable Profile, which would allow small businesses to carry a verified financial profile with them when seeking financing from different providers.
The second workstream will test invoice factoring using separate digital-money rails within the same transaction. An exporter would receive an advance through stablecoin payments while a UK importer completes final settlement in digital pounds.
Polygon Labs' CEO, Marc Boiron, said that for digital money to move trade worldwide, different forms of digital money and financial data must work together, including public and private central bank-issued money and stablecoins.