The Bank of England's Digital Pound Lab is testing the interoperability of stablecoins and a potential digital British pound in cross-border trade finance. The experiments, involving NOBO Finance, Dun & Bradstreet, and Polygon Labs, aim to reduce settlement delays and financing constraints for small businesses.
These experiments could pave the way for more efficient cross-border trade finance, potentially unlocking working capital for small businesses and modernizing payment systems, though the Bank of England has not committed to issuing a digital pound.
The Bank of England's Digital Pound Lab is conducting Phase 2 experiments to test the interoperability of stablecoins and a potential digital British pound within cross-border trade finance flows. The initiative involves NOBO Finance, Dun & Bradstreet, and Polygon Labs, aiming to reduce settlement delays and financing constraints for small and medium-sized businesses.
One workstream focuses on creating reusable credit profiles for small businesses by combining transaction data, open-finance information, and Dun & Bradstreet’s commercial risk data, with Polygon providing the smart contract infrastructure. Exporters can face significant delays in receiving payment after shipping goods, tying up working capital, making access to trade finance crucial for smaller firms.
These experiments do not involve real customers or money, and the Bank of England has not committed to issuing a digital pound. The central bank has stated that participant-designed experiments should not be interpreted as indications of future policy or endorsements of the companies involved. The findings will inform the Bank of England and the Treasury's joint assessment later this year.