Key facts
- The Bank of England's Digital Pound Lab is conducting Phase 2 experiments.
- The project tests the interoperability of public stablecoins and central bank money in trade finance.
- Participants include NOBO Finance, Dun & Bradstreet, and Polygon Labs.
- The experiments aim to improve creditworthiness and access to funding for small businesses.
- Findings will guide the BOE and Treasury's future decisions on digital currency.
The Bank of England has initiated Phase 2 of its digital pound project, focusing on how stablecoins and central bank digital currency can function together in cross-border finance, particularly for trade finance. This experimental phase involves collaboration with NOBO Finance, Dun & Bradstreet, and Polygon Labs within the Digital Pound Lab.
The experiments aim to assess the interoperability of public stablecoin infrastructure and central bank money within a single payment flow. A key objective is to enhance trade finance processes, which could significantly benefit small and medium-sized enterprises (SMEs) by improving their ability to prove creditworthiness and access funding more efficiently.
NOBO Finance, a fintech specializing in digital trade finance infrastructure, is a returning participant from Phase 1. Dun & Bradstreet will contribute business decisioning data and analytics, while Polygon Labs will provide stablecoin settlement infrastructure and smart contract capabilities. The project will explore creating a reusable credit assessment for SMEs by combining wallet transaction data, open-finance information, and business intelligence.
One workstream will focus on building an SME "bankable profile," and another will experiment with invoice factoring using electronic bills of lading. These trials do not involve real customers or money and are intended to inform the Bank of England and the Treasury's broader assessment of digital money and its potential applications in modernizing financial systems.