Bank of England to pilot stablecoins and digital currencies for cross-border payments.
DeFi & Yields ·
The Bank of England has advanced its digital pound exploration into Phase 2, moving beyond theoretical work to test how public stablecoins and central bank money can operate within a single payment flow for trade finance. The initiative involves NOBO Finance, Dun & Bradstreet, and Polygon Labs, with experiments designed around a scenario where exporters receive stablecoins while importers settle using a potential digital pound. The BOE has been exploring central bank digital currency and distributed-ledger technology since 2024 as central banks globally work to understand how private and state-issued digital money forms interact.
The pilot will focus on two main workstreams. The first creates portable credit profiles for small enterprises by combining wallet transaction data, open-finance information, and business intelligence; Polygon will supply smart contracts to record verified outcomes and manage consent. The second tests invoice factoring arrangements where exporters obtain advances via stablecoins, a mechanism intended to accelerate trade-finance processes. These experiments involve no real customers or actual money transfers and do not represent any decision by the BOE to issue a digital pound.
The experiments aim to clarify how different forms of digital money can operate together, informing the BOE and Treasury's broader policy assessment. The focus on trade finance reflects recognition that delays in these processes create obstacles for small businesses seeking to demonstrate creditworthiness and access funding. What remains unclear is whether findings from this Phase 2 pilot will lead to broader adoption or regulatory frameworks governing stablecoin and CBDC coexistence in live payment systems.