The Bank of England today announced it’s moving forward with Phase 2 of its Digital Pound Lab, enlisting Polygon Labs, UK fintech NOBO Finance, and business-data giant Dun & Bradstreet. This consortium will investigate how stablecoin payments and a potential central bank digital pound (CBDP) could streamline cross-border trade finance for small and medium-sized enterprises (SMEs).
The announcement, made on August 12, 2026, marks a significant step in the UK’s exploration of digital currencies. While the trials are strictly experimental and involve no real money or customers, they highlight the central bank’s pragmatic approach to integrating distributed ledger technology into future financial infrastructure.
Advancing SME trade finance with digital currencies
The primary driver behind this initiative is the pressing need to modernize and reduce the cost of trade finance for SMEs. Currently, these businesses often face slow and expensive processes when exporting or importing goods.
Verification across multiple parties and protracted settlement times can cause significant cash flow problems. This issue is particularly acute for smaller firms lacking the extensive treasury operations of larger corporations.
The Bank of England aims to address this by exploring how various forms of digital money, including private stablecoins and a potential digital pound, can work together more efficiently. This effort takes aim at the estimated $2.5 trillion global financing gap for SMEs, as identified by the Asian Development Bank.
Two key workstreams for enhanced efficiency
The consortium, led by NOBO Finance, will focus on two interconnected projects within the Digital Pound Lab’s experimental program. These workstreams aim to tackle different facets of the trade finance challenge.
The first workstream focuses on improving cross-border settlement. Here, the team is simulating a scenario where exporters receive immediate advances via stablecoin payments, while UK importers complete their final settlement using digital pounds.
Polygon Labs’ Open Money Stack provides the crucial infrastructure for the stablecoin leg of these transactions. This includes handling fiat-to-stablecoin conversions, managing digital wallets, and facilitating settlement within the simulated environment.
The second major project involves creating a portable credit identity solution, dubbed the “SME Bankable Profile.” This innovative concept aims to allow SMEs to carry a verified profile between lenders, eliminating the need to resubmit paperwork for each financing application.
Dun & Bradstreet brings its extensive Commercial Graph and risk data capabilities to this project, providing reliable identity and risk information. Polygon Labs contributes the smart contract framework that underpins the consent management, verification, and overall lifecycle of these digital financing deals.
Polygon Labs’ central role in the trials
Polygon Labs’ participation underscores the growing influence of public blockchain solutions in central bank experiments. The firm’s Open Money Stack is central to enabling the stablecoin elements of the trials.
This comprehensive platform handles the technical complexities of converting fiat currency into stablecoins and managing the associated digital wallets and settlement processes. It ensures the smooth operation of the stablecoin leg of the simulated cross-border transactions.
The choice of Polygon Labs isn’t surprising given its recent performance. Its network processed 743 million transactions in the second quarter of 2026, marking a 160% increase from the previous year.
A significant portion of this growth came from stablecoin transfers, indicating the network’s robustness and capability in handling such volumes. Polygon has settled over $2.6 trillion in stablecoin transactions to date and counts major financial players like Revolut and Stripe among its users.
Marc Boiron, CEO of Polygon Labs, emphasized the need for different forms of digital money to cooperate for global trade to truly benefit. He noted that the experiment directly tests this interoperability between private stablecoins and a digital pound within a single transaction flow.
Central bank caution and regulatory outlook
Despite the advanced testing, the Bank of England maintains a clear stance regarding the digital pound’s future. Officials have repeatedly stressed that participation in these trials does not signal a definitive decision to issue a central bank digital currency for the UK.
The Digital Pound Lab operates strictly as an experimental platform, allowing financial and technology companies to prototype potential products and payment use cases in a controlled environment. The findings from Phase 2 will be crucial in informing the Bank and HM Treasury’s broader assessment of the digital pound later in 2026.
This exploratory phase follows the Bank of England’s policy statement and draft Code of Practice for sterling systemic stablecoins, published on June 22. This document introduced a “temporary issuance guardrail” of £40 billion for each systemic stablecoin, alongside a requirement for issuers to hold a minimum of 30% of backing assets in central bank deposits.
Beyond the lab: what these trials signify
The Bank of England’s decision to engage external blockchain firms like Polygon Labs for its digital pound trials speaks volumes about the evolving relationship between traditional finance and distributed ledger technology. Rather than developing an entirely proprietary system in isolation, the central bank appears to be exploring existing, proven infrastructure.
This collaborative approach could pave the way for a more integrated digital financial ecosystem in the UK. It suggests a recognition that private stablecoins, already gaining traction, can play a complementary role alongside a potential CBDC.
Dun & Bradstreet’s Sara de la Torre highlighted the importance of reliable business identity and risk data in fostering trust within trade finance. By integrating the D&B Commercial Graph, the project aims to make SMEs more visible and bankable, ultimately improving their access to crucial financing.
The success of these interoperability tests could set a precedent for other central banks globally. It demonstrates a pathway for central banks to leverage the innovation from the crypto space while maintaining regulatory oversight and financial stability.
Ultimately, the work being done within the Digital Pound Lab represents a critical juncture for the future of digital payments in the UK. The detailed findings, expected later this year, will provide significant insights into the practicalities and potential benefits of a digital pound ecosystem that integrates both public and private digital monies.