BoE Tests Stablecoin, Digital Pound Interoperability in Cross-Border Payments Experiment

The Bank of England's Digital Pound Lab is conducting an experiment to test whether stablecoins and a potential digital British pound can operate within the same cross-border payment flow. The lab, which uses no real customers or money, involves NOBO Finance, Dun & Bradstreet, and Polygon Labs in a project aimed at reducing settlement delays and financing constraints for small- and medium-sized businesses engaged in cross-border trade.

The experiment includes two workstreams: one focused on stablecoin rails and digital pounds, and another creating reusable credit profiles for small businesses by combining transaction data, open-finance information, and Dun & Bradstreet's commercial risk data. Polygon provides the smart contract infrastructure for this project.

According to a Wednesday announcement from the three companies, an exporter receives an advance via a stablecoin rail while a UK importer completes settlement using simulated digital pounds. The test is meant to improve trade finance for smaller firms, which often wait days to receive payment after shipping goods.