Polygon Labs, NOBO Finance and Dun & Bradstreet have joined Phase 2 of the Bank of England's Digital Pound Lab to test stablecoin and digital pound trade finance applications. According to the latest reports, the consortium will develop a reusable SME credit profile using transaction data, business intelligence and Polygon-based smart contract infrastructure through its Open Money Stack. The programme focuses on cross-border SME trade finance, where verification can involve several parties and payments can take days to settle. NOBO Finance completed Phase 1 after demonstrating conditional business-to-business escrow payments for trade finance, with the current phase adding Dun & Bradstreet's commercial data and Polygon's blockchain infrastructure to build out identity and settlement components. As reported by the Bank of England, this marks the first time the lab tests how public stablecoins and central bank money work together in a single payment flow alongside a portable credit identity for small businesses.
Lynq CEO Jerald David emphasizes that digital money needs interoperable settlement rails as institutions adopt multiple forms of digital money including stablecoins, tokenized deposits, CBDCs, and traditional bank money. According to David's comments to crypto.news, "I do not expect a single form of digital money to replace all others." He notes that institutions may have sufficient capital overall, but the funds may not be available in the right form or location when needed. "The challenge arises when these different forms of money operate on separate rails. An institution may have sufficient capital available, but not necessarily in the right form or in the right place at the point it is needed." David argues that fragmented systems can create problems across funding, collateral management, and settlement, forcing firms to place funds in advance at multiple venues or counterparties, tying up capital that could otherwise remain available for other transactions.
The consortium will develop what they call an SME Bankable Profile, combining transaction information from consent-based wallets with open finance data and business intelligence to generate a reusable, pre-qualified credit outcome. Dun & Bradstreet will provide commercial intelligence and risk indicators already used by credit teams, while Polygon will supply smart contracts for consent management, verification and the lifecycle of financing deals. Under the proposed model, an SME could carry a verified financial profile based partly on its transaction history instead of repeating the same assessment process when approaching another lender or financing market. Otto Jacobsson, U.K. chapter lead at the Digital Assets Association, noted that improvements in trade finance would particularly benefit small businesses because delays can make it harder for them to prove creditworthiness and secure funding. The group is also experimenting with invoice factoring backed by electronic bills of lading, in a model where an exporter receives an advance through stablecoin technology while a UK importer completes final settlement in digital pounds.
A second workstream will test invoice factoring backed by electronic bill of lading (eBL) using separate digital-money rails within the same transaction. Under the test structure, an exporter would receive an advance through a stablecoin payment while a UK importer would complete final settlement using simulated digital pounds. Polygon Labs will provide infrastructure for the stablecoin portion through the Open Money Stack, which combines fiat conversion, wallets, stablecoin settlement and other payment infrastructure. Marc Boiron, CEO of Polygon Labs, emphasized that "For digital money to actually move the world's trade, its different forms have to work together — public and private, central bank money and stablecoins. This experiment tests exactly that, an exporter paid instantly in stablecoins while the importer settles in a digital pound, in a single flow." The structure allows examination of whether private stablecoins and central bank-issued digital money can operate within a single trade finance transaction. Polygon's Open Money Stack has settled more than $2.6 trillion in stablecoin transactions and is already being used by companies including Revolut and Stripe.
The Digital Pound Lab forms part of the Bank of England's continuing research into how a possible retail central bank digital currency could function alongside existing and emerging payment systems. The BOE has been experimenting with a central bank digital currency (CBDC) and distributed-ledger technology since 2024, with the Digital Pound Lab entering Phase 2 to test how public stablecoins and central bank money can operate together in a single payment flow for trade finance. Deputy Governor Sarah Breeden said the UK's future retail payment infrastructure could accommodate several forms of digital money, including tokenized bank deposits, regulated stablecoins and a possible digital pound. The central bank has not decided to issue a digital pound, with its work examining design and infrastructure requirements if policymakers later decide to proceed with one. The central bank subsequently finalized stablecoin rules in June, removing previously proposed limits on individual holdings of systemic stablecoins and setting an initial £40 billion issuance limit per token.
