BoE tests digital pound-stablecoin bridge in trade finance
The Bank of England is testing whether stablecoins can settle alongside a simulated digital pound in cross-border trade, a step that signals the country's broader push toward 24/7 tokenized payment infrastructure.
The Bank of England’s Digital Pound Lab is running a trade finance experiment that blends stablecoin transfers with simulated digital pound settlement. In the test, an exporter receives an advance through a stablecoin rail while a UK importer settles using the central bank’s simulated digital currency. The private-sector partners driving the project are NOBO Finance, Dun & Bradstreet and Polygon Labs, which is providing the smart contract infrastructure.
The test targets a specific bottleneck in cross-border commerce. Exporters often wait days to receive payment after shipping goods, a delay that restricts working capital and limits access to trade finance. By bridging different digital rails, the project aims to shorten settlement windows and ease financing constraints for small- and medium-sized businesses.
A secondary workstream within the experiment focuses on SME credit profiling. It uses transaction data and open-finance information, combined with Dun & Bradstreet’s commercial risk data, to build reusable credit profiles for smaller firms.
Regulatory and infrastructure groundwork
This lab experiment is progressing in parallel with the UK’s effort to build a formal regulatory framework for tokenized assets. In June, the central bank published draft rules for systemic sterling-denominated stablecoins, proposing a temporary £40 billion ($52.8 billion) issuance cap and allowing issuers to hold up to 70% of their reserves in interest-bearing government debt.
The regulatory timeline points to finalized rules by the end of 2026 and a planned rollout in 2027. Under the proposal, systemic, payments-focused stablecoins will fall under the Bank of England’s oversight, while smaller, non-systemic tokens will remain with the Financial Conduct Authority.
To support these new settlement models, the central bank is also overhauling its legacy plumbing. In May, the Bank of England proposed moving its Real-Time Gross Settlement and CHAPS systems to near-24/7 operation, extending hours to include weekends.
That infrastructure push advanced further in July when the central bank approved HSBC’s Orion platform for the UK’s Digital Securities Sandbox. The platform is expected to support digital bond issuance, including the country’s planned Digital Gilt Instrument.
The Bank of England stressed that the Digital Pound Lab uses no real money or customers. Furthermore, the central bank has not committed to actually issuing a digital pound, noting that participant-designed experiments do not signal future policy or constitute endorsements of the companies involved.
