Bank of England Tests Stablecoin-Digital Pound Interoperability in Cross-Border Trade Experiment

The Bank of England is pushing forward with its experimental Digital Pound Lab, where privately issued stablecoins and a potential digital pound are being tested for their ability to settle different legs of the same cross-border trade transaction. The lab has entered its second phase, which involves working with three companies: Polygon Labs, NOBO Finance, and Dun & Bradstreet.

The experiment aims to test whether different forms of digital money can interoperate rather than forcing companies and customers onto a single payment infrastructure. In this case, the goal is to settle an invoice factoring scenario using stablecoins and the Bank's own test infrastructure for digital pounds. Both legs will move through a single orchestration layer rather than two separate settlement processes.

Polygon Labs is contributing its Open Money Stack, which handles fiat-to-stablecoin conversion, embedded wallets, and smart contracts. The digital pound leg settles on the Bank's centralized demonstration ledger, while a separate Hyperledger Besu environment supports smart contracts and digital assets.

The consortium's second workstream targets a problem that faster payments alone cannot solve: the fragmented verification and manual checks that make trade finance slow and costly for small and medium-sized enterprises. NOBO Finance is leading development of an SME Bankable Profile, which combines transaction data from consent-based wallets, open finance information, and Dun & Bradstreet's commercial risk data to create a reusable, pre-qualified credit outcome.