A new move comes from the innovation lab of one of the world’s oldest central banks. The Bank of England’s Digital Pound Lab has begun testing whether stablecoins and the digital pound can potentially operate side-by-side in a single cross-border payment flow.
This experiment is not running in isolation. The Bank of England is partnering with NOBO Finance, Dun & Bradstreet, and Polygon Labs to design the simulation of the money flow. The scenario is specifically structured: an exporter receives an advance payment through a stablecoin channel, while the importer in the UK completes the final settlement using a simulated version of the digital pound.
The primary focus is to find a solution for Small and Medium Enterprises (SMEs) that often face significant barriers when conducting cross-border trade. The combination of these two forms of digital assets is expected to eliminate settlement delays and reduce financing bottlenecks. This trial is clearly not just a technology showcase, but a search for concrete solutions in the field.
Smart Contract-Based SME Credit Profile
Beyond payment matters, there is another task being developed in parallel. The experiment designs the creation of reusable credit profiles specifically for SMEs. The process draws from a combination of transaction data streams, open financial information, and commercial risk data from Dun & Bradstreet.
Polygon Labs enters at this stage by providing the smart contract foundation. This technology opens new avenues to record a transparent and easily accessible credit history. However, all testing within the Digital Pound Lab is purely a simulation. No real money is at stake, no actual customers are involved, and the Bank of England emphasizes that it has not made any official commitment to launch a digital pound in the future.
Rules of the Game Being Crafted
The work inside the lab runs in parallel with regulatory preparations outside. In June 2026, the Bank of England released a draft rulebook for sterling stablecoins deemed to have a systemic impact on the economy. Issuers will be allowed to hold up to 70% of reserves in interest-bearing government debt, with the initial issuance cap set at £40 billion.
Supervisory authority has also been outlined. Systemic stablecoins will fall directly under the Bank of England, while non-systemic options will be regulated by the Financial Conduct Authority (FCA). The set timeline is quite tight: final rules are targeted to be finalized by the end of 2026, followed by implementation in 2027.
This series of steps reflects a rapid overhaul of the UK’s financial infrastructure. In May 2026, the central bank proposed that the RTGS and CHAPS payment systems operate near 24/7, including on weekends. Moving into July 2026, a green light was given to HSBC’s Orion platform to issue digital bonds through the Digital Securities Sandbox program. Past hesitation is slowly fading - the British financial system is starting to rearrange its walls to make room for distributed ledger technology.
Reported from Cointelegraph.
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Disclaimer: This article is for informational and educational purposes only, not financial advice. Cryptocurrency assets are highly volatile and carry significant risk. Always do your own research (DYOR) and never invest more than you can afford to lose.
