The Bank of England’s Digital Pound Lab Moves to Phase 2
The Bank of England is moving its Digital Pound Lab into Phase 2. The focus this time is fairly specific: can stablecoins and a simulated digital pound work together to settle a cross-border trade payment?
The experiment is being led by NOBO Finance, Dun & Bradstreet and Polygon Labs. It is not a live launch of a digital pound. No real customers or real money are involved, but what makes the trial interesting is that it tests different forms of digital money working together, rather than asking which one should replace the others.
So, what is actually being tested?
The consortium is looking at two connected problems in trade finance.
The first is how small and medium-sized businesses prove that they are creditworthy. The proposed “SME Bankable Profile” would bring together consented transaction data, open-finance information and verified business records into a portable digital profile.
The idea is that instead of a business repeatedly submitting the same information to different financial institutions, its verified financial identity could move with the transaction.
The second test involves invoice factoring. An exporter could receive an advance in stablecoins, while the importer settles the final payment in digital pounds. The two payments would be coordinated through the same transaction flow.
That matters because cross-border trade payments can be slow. Businesses often have to deal with multiple intermediaries, repeated verification and settlement delays. For an SME, waiting several days for a payment can also mean waiting several days for working capital. The experiment is therefore testing whether different forms of digital money can settle different parts of the same transaction without creating additional delays.
Why stablecoins and a digital pound together?
The interesting part of the experiment is that the Bank of England is not testing the digital pound in isolation.
The UK is also developing a regulatory framework for systemic sterling stablecoins. In June 2026, the Bank published its policy statement and draft Code of Practice for these stablecoins, including a temporary £40 billion issuance guardrail per coin. This creates an important policy question: if private digital money and potentially public digital money are both going to exist, can they actually work together?
The Digital Pound Lab is one way of testing that question before making a decision on whether to issue a digital pound. It also fits into the Bank’s broader idea of a “multi-money” system, where bank deposits, regulated stablecoins, tokenised deposits and potentially a digital pound can coexist and remain interoperable.
But this is still a laboratory experiment
A simulated transaction cannot tell the Bank everything about how the system would behave with real money, real businesses and real financial risks. Issues around liquidity, operational resilience, privacy, data consent and the legal recognition of electronic bills of lading across countries will still need to be worked out.
There is also a political question. Even though the Bank and HM Treasury have not decided to issue a digital pound, repeatedly testing one could create an expectation that its eventual introduction is inevitable. For now, however, the Lab does not make that decision. Its purpose is to generate evidence.
What should happen next?
The most useful question for the Bank and HM Treasury will be whether the experiment actually solves the problems it is designed to address.
Did using two forms of digital money make settlement faster? Did the portable SME profile reduce repeated verification? And did these changes meaningfully reduce the cost of cross-border trade for smaller businesses?
If the answer is yes, the next step should be carefully controlled live pilots rather than an immediate move towards a full-scale digital pound.
The bigger takeaway is that the UK does not necessarily have to choose between stablecoins and a digital pound. The more important challenge may be making sure that different forms of money can work together safely, efficiently and under clear rules.
Source:
Polygon Labs. “Polygon Labs Joins NOBO Finance and Dun & Bradstreet in Phase 2 of the Bank of England’s Digital Pound Lab.” Polygon Technology blog, 11 August 2026. https://polygon.technology/blog/polygon-labs-joins-nobo-finance-and-dun-bradstreet-in-phase-2-of-the-bank-of-englands-digital-pound-lab.
Bacudo, Karen Joy. “NOBO, D&B & Polygon join Digital Pound Lab trade test.” CFOtech UK, 12 August 2026. https://cfotech.co.uk/story/nobo-d-b-polygon-join-digital-pound-lab-trade-test.
“Bank of England taps Polygon consortium for digital pound trade finance tests.” Crypto.news, 12 August 2026. https://crypto.news/bank-of-england-taps-polygon-consortium-for-digital-pound-trade-finance-tests/.
Nguyen, Vivian. “Bank of England taps NOBO, Polygon Labs and Dun & Bradstreet to pilot SME credit data in Digital Pound Lab.” Crypto Briefing, 12 August 2026. https://cryptobriefing.com/bank-of-england-taps-polygon-labs-and-dun-bradstreet-for-digital-pound-trial/.
“Bank of England to Test Whether Stablecoins and a Digital Pound Can Settle the Same Trade.” Unchained, 13 August 2026. https://unchainedcrypto.com/bank-of-england-to-test-whether-stablecoins-and-a-digital-pound-can-settle-the-same-trade/.
Emanuel-Burns, Cameron. “Polygon Labs joins Bank of England’s Digital Pound Lab.” FinTech Futures, 14 August 2026. https://www.fintechfutures.com/fintech-innovation/polygon-labs-joins-bank-of-england-s-digital-pound-lab.
Bank of England. “Bank of England launches policy statement and draft rules on regulating systemic stablecoins.” Bank of England, 22 June 2026 (context for the multi-money framework referenced alongside the Lab). https://www.bankofengland.co.uk/news/2026/june/boe-launches-policy-statement-and-draft-rules-on-regulating-systemic-stablecoins.
Bank of England. “Digital Pound Lab: Phase 2 update.” Bank of England, last updated 25 June 2026. https://www.bankofengland.co.uk/the-digital-pound/lab/digital-pound-lab-phase-2-update.
Bank of England. “Digital Pound Lab.” Bank of England, last updated 23 June 2026. https://www.bankofengland.co.uk/the-digital-pound/lab.
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