Polygon Labs has entered Phase 2 of the Bank of England's Digital Pound Lab, partnering with NOBO Finance and Dun & Bradstreet to explore whether stablecoins and a potential digital pound can function together within cross-border trade finance workflows.

The initiative investigates how multiple forms of digital money could settle within a single transaction flow, eliminating the need for businesses to navigate disconnected payment rails. It is one of several exploratory efforts worldwide examining how privately issued stablecoins and potential central bank digital currencies might coexist, a question that remains unresolved as jurisdictions from the European Union to Singapore advance their own digital currency frameworks.

Stablecoin and Digital Pound Settlement Tests

The Digital Pound Lab operates as a simulated environment with no real customers, no actual money, and no formal regulatory approval tied to its experiments. Participation does not signal that the Bank of England endorses Polygon or has chosen its technology for any future digital pound. Rather, the program gives companies an opportunity to explore potential use cases ahead of real-world deployment. The Bank of England and HM Treasury have not yet made a formal decision on whether to proceed with a retail digital pound, and a final determination is not expected until later in the decade.

Polygon will take part in cross-border settlement innovation trials where the exporter settles transactions through stablecoins while the importer settles via the digital pound. The stablecoin portion of the settlement will be powered by the Polygon Open Money Stack, and the digital pound leg will operate on the bank's simulated infrastructure.

The experiment addresses fragmentation among bank money, stablecoins, tokenized deposits, and potential central bank digital currencies. When different forms of money cannot settle against one another efficiently, firms face liquidity traps, added costs, and elevated settlement risk. These inefficiencies are particularly pronounced in cross-border trade finance, where transactions traditionally rely on correspondent banking networks that can take days to clear and impose multiple intermediary fees.

Polygon's official announcement outlines the scope of the collaboration.

SME Bankable Profile for Trade Finance

A related initiative within the consortium is the SME Bankable Profile, led by NOBO Finance. This profile draws on consented wallet activity, open-finance data, and commercial data supplied by Dun & Bradstreet to construct a bankable financial identity for small and medium-sized enterprises.

The tool is designed for small businesses engaged in international trade, where lengthy verification procedures and delayed payments can restrict access to working capital. Access to trade finance is a persistent gap for SMEs globally; the International Chamber of Commerce has estimated that the unmet demand for trade finance reaches into the trillions of dollars. Faster settlements paired with portable credit records would allow lenders to assess SMEs more effectively.

Polygon Expands On-Chain FX Infrastructure

Polygon's participation coincides with broader growth across its payment ecosystem. Mento Protocol has launched on Polygon with a USDm/EURm liquidity pool, supported by Capa and Schuman Financial's EURØP stablecoin. The project targets the non-dollar stablecoin market, where adoption has lagged behind dollar-backed tokens that account for the overwhelming majority of stablecoin circulation.

Mento employs a fixed-price market maker mechanism that references foreign exchange rates through price oracles, enabling deterministic execution rather than the variable outcomes associated with volatile automated market makers.

This development adds another layer to Polygon's ecosystem by connecting stablecoins, local currencies, and financial institutions.

"Interoperability between public and private digital currencies is key to making blockchain payments systems work in facilitating international commerce," said Marc Boiron, CEO of Polygon. The Bank of England pilot tests will soon put that principle into practice.

Next Steps

The next milestone will be the published outcomes of Phase 2. Favorable results could position Polygon as infrastructure capable of connecting stablecoins, tokenized assets, and potential CBDCs going forward. Nonetheless, these experiments should not be interpreted as evidence that a digital pound or Polygon-based settlement infrastructure will be deployed in the near term.