Bank of England Tests Stablecoins Alongside Digital Pound Settlement

The Bank of England is testing whether a privately issued stablecoin and a central bank digital currency can settle opposite legs of the same cross-border trade. Polygon Labs said Tuesday it is participating in Phase 2 of the bank’s Digital Pound Lab, an experimental platform that simulates a digital pound without real money or customers, alongside NOBO Finance and Dun & Bradstreet.

The consortium is running two connected workstreams. The first, an SME Bankable Profile led by NOBO, creates a risk profile for small businesses. Dun & Bradstreet supplies the data that builds the profile. Polygon Labs provides the smart contract infrastructure. The test involves an exporter paying in stablecoins using rails built on Polygon’s Open Money Stack, while a UK importer makes final settlement in digital pounds on the central bank’s simulated rails.

Regulators have largely framed private stablecoins and central bank money as rivals for the same payment volume. This experiment assumes both will exist and asks whether they can settle against each other on demand inside a single flow. “For digital money to actually move the world’s trade, its different forms have to work together,” said Marc Boiron, CEO of Polygon Labs.

Findings feed a joint assessment by the central bank and HM Treasury ahead of next steps later this year, and nothing tested commits the UK to issuing a digital pound. Polygon Labs pivoted to payments in January after buying Coinme and Sequence.