Bank of England enters Phase 2 digital pound tests with stablecoins and trade finance

The Bank of England (BOE) has moved its digital pound exploration into Phase 2, using its Digital Pound Lab to examine whether public stablecoin infrastructure and central bank money can operate together in a single trade-finance payment flow. Working alongside NOBO Finance, Dun & Bradstreet, and Polygon Labs, the lab will run two workstreams: building a reusable credit profile for small and medium-sized enterprises (SMEs) and testing invoice factoring backed by electronic bills of lading, in which an exporter receives an advance in stablecoin while a UK importer settles in a potential digital pound.

The experiments involve no real customers or money, and the BOE is explicit that they do not signal any decision to issue a digital pound. Rather, the work is designed to inform the BOE and HM Treasury’s assessment of how different forms of digital money can interoperate. NOBO, which was already part of Phase 1 where it demonstrated conditional business-to-business escrow payments, will combine wallet transaction data, open-finance information, and business intelligence with Dun & Bradstreet’s analytics and Polygon’s smart contracts to generate a portable credit identity for SMEs. Polygon will provide stablecoin settlement infrastructure through its Open Money Stack.

The operator-level significance lies in what the choice of workstreams reveals. Trade finance, with its well-documented friction for smaller exporters, is being used as the stress-test environment for public-private digital money interoperability precisely because the inefficiencies are measurable and the SME creditworthiness gap is concrete. Otto Jacobsson, UK chapter lead at the Digital Assets Association, noted in an interview that trade-finance delays make it harder for smaller firms to prove creditworthiness and access funding, and that faster processes could unlock working capital sooner. The architecture being tested, combining blockchain-based credit profiles with a hybrid stablecoin-and-CBDC settlement rail, maps closely to infrastructure decisions that payments firms and trade-finance platforms will face if either instrument reaches production.