The Bank of England has skipped past the question of whether stablecoins or a central bank digital currency comes out on top. What it wants to know is whether the two can sit inside the same payment, covering one invoice, at the same moment.
That is the substance of the BOE’s step into Phase 2 of its digital pound exploration, announced Wednesday. Public stablecoin infrastructure on one side, central bank money on the other, and a trade finance transaction running between them.
What Phase 2 actually does differently
Since 2024 the BOE has been probing a CBDC and the distributed ledger technology that sits beneath blockchains. Phase 2 sharpens that into something narrower and far easier to test: can public stablecoin rails and central bank money coexist within a single payment flow for trade finance?
It is the first attempt at this by the Digital Pound Lab. It is also the first time the lab has paired such an experiment with a portable credit identity for small businesses.
The limits are worth stating plainly. No real customers and no real money are used in the lab. Nothing here signals any decision to issue a digital pound. This is a sandbox, not a launch.
Who’s in the room
The participants named by the BOE are NOBO Finance, Dun & Bradstreet and Polygon Labs. Dun & Bradstreet supplies business decisioning data, analytics and credit-rating services globally. Polygon Labs is a software and blockchain company.
NOBO is a U.K.-based fintech building digital trade finance infrastructure designed to make small and medium-sized enterprises visible, verifiable and bankable. It had already taken part in Phase 1, where it helped demonstrate conditional business-to-business escrow payments relevant to trade finance workflows.
The frozen capital problem
Timing is what makes any of this matter to a business owner rather than only to a policy desk.
“Cross-border SME trade finance is still slowed by fragmented verification, manual checks, and settlement that can take days,” the group said in a statement. “For small businesses, the gap between shipping goods and receiving payment is frozen capital.”
Otto Jacobsson, U.K. chapter lead at the Digital Assets Association, cast the same gap as a creditworthiness issue. Delays in trade finance make it tougher for smaller firms to prove they’re good for the money and to reach funding, Jacobsson said.
“If these processes can become faster and more efficient, U.K. businesses could unlock working capital sooner and make it easier to finance international trade,” Jacobsson said in an interview over LinkedIn.
Two workstreams, one of them genuinely interesting
The first sets out to build an SME “bankable profile.” NOBO, Dun & Bradstreet and Polygon plan to fold wallet transaction data, open-finance information and business intelligence into a credit assessment that can be reused. Polygon’s contribution is the smart contracts that record the verified outcome and manage consent.
The second workstream is where the thesis gets tested. The group will experiment with invoice factoring backed by electronic bills of lading. Stablecoin technology delivers an advance to an exporter. Final settlement then comes from a U.K. importer in digital pounds.
One transaction. Two different kinds of money. That’s the whole point.
Polygon’s pitch, and what it’s actually supplying
“For digital money to actually move the world’s trade, its different forms have to work together, public and private, central bank money and stablecoins,” Marc Boiron, CEO of Polygon Labs, said in the statement. “This experiment tests exactly that.”
Boiron’s company said it will supply the stablecoin settlement infrastructure through its Open Money Stack, covering fiat-to-stablecoin conversion, wallets and smart contracts.
That framing deserves the appropriate amount of salt. There is nothing neutral about a blockchain company arguing that blockchains belong in central bank plumbing. The technical contribution, though, is concrete enough to be judged on its own terms.
The question underneath the question
Central banks everywhere are working through how to regulate private stablecoins — crypto tokens whose value is pegged to a fiat currency — alongside potential state-issued digital versions of their own currencies.
That debate is usually framed as a contest. The BOE’s experiment reframes it: can different forms of digital money interoperate, rather than forcing companies and customers onto a single payment infrastructure?
What to watch for
The findings feed into the joint BOE and Treasury assessment of the digital pound ahead of its next steps later this year.
If you’re an SME exporter waiting on payment, don’t change anything yet. Watch that joint assessment instead. Whether the exporter-gets-stablecoin, importer-pays-digital-pound handoff survives contact with real settlement is the detail that tells you if any of this leaves the lab.