Bank of England Launches Phase 2 of Digital Pound Lab for Trade Finance

The Bank of England has advanced its exploration of digital currencies by launching the second phase of its Digital Pound Lab, a collaborative initiative testing how a potential central bank digital currency could work alongside private stablecoins to streamline cross-border trade finance. The project, which began in August 2025, is now conducting experiments with a consortium including NOBO Finance, Dun Bradstreet, and Polygon Labs.

The Digital Pound Lab is an experimental sandbox environment that uses simulated digital pounds and involves no real customers or money. It does not represent a decision by the Bank of England or HM Treasury to issue a digital pound. Instead, the initiative is designed to evaluate technical architectures and inform the joint assessment of whether a digital currency should move beyond the design phase. The current phase focuses on a specific trade finance use case aimed at helping small and medium-sized enterprises (SMEs) overcome payment delays and financing barriers.

At the core of the experiment is a dual-currency settlement model. In one scenario, an overseas exporter could receive an advance payment against an invoice through a stablecoin rail,...