Bank of England to test stablecoin, digital currency use in cross-border finance The BOE-led Digital Pound Lab will test trade-finance interoperability, in which exporters receive stablecoins while importers settle in a potential digital pound. – The Bank of England’s digital…
und project entered Phase 2, testing how public stablecoins and central bank money can operate together in a single payment flow for trade finance. – Working with NOBO Finance, Dun & Bradstreet and Polygon Labs in its Digital Pound Lab, the BOE will explore creating reusable credit profiles for small enterprises and using stablecoins alongside a potential digital pound for invoice factoring. – The experiments, which do not involve real customers or money, are intended to inform the BOE and the Treasury’s assessment of how different forms of digital money can interoperate. The Bank of England (BOE) is testing how stablecoins and a digital pound can work together as central banks globally grapple with how the two payment mechanisms interact to modernize cross-border finance
By moving its digital pound exploration into Phase 2, the BOE is testing whether public stablecoin infrastructure and central bank money can coexist in a single payment flow for trade finance, it said Wednesday. The BOE has been experimenting with a central bank digital currency (CBDC) and the distributed-ledger technology that forms the backbone of the blockchain since 2024. Central banks worldwide are exploring how to regulate private stablecoins, which are crypto tokens whose value is pegged to a fiat currency, alongside potential state-issued digital versions of their currencies, or CBDCs.
At the heart of the experiment is the improvement of trade finance, which would particularly benefit small businesses, according to Otto Jacobsson, U.K. chapter lead at the Digital Assets Association. Trade-finance delays make it harder for those firms to prove creditworthiness and access funding, he said. “If these processes can…