Bank of England Tests Stablecoins and Digital Pound in Trade Finance Push

The Bank of England has moved its digital pound exploration into a second testing phase, examining whether public stablecoin infrastructure and central bank-issued digital money can work together within a single payment system for trade finance.

Small Businesses Are the Main Focus

The experiment centers on improving trade finance for small and medium sized businesses, which often struggle with delays that make it harder to prove creditworthiness and access funding. Faster, more efficient processes could help these firms unlock working capital sooner and simplify international trade financing.

Key Partners Join the Digital Pound Lab

The central bank named several participants in the project, including a UK based fintech focused on trade finance infrastructure, a global business data and credit-rating provider, and a blockchain software company. Together, they plan to build a reusable “bankable profile” for small businesses by combining wallet transaction data, open-finance information and business intelligence, with smart contracts used to record verified outcomes.

Testing Stablecoin-Backed Trade Settlements

The group will also trial invoice factoring backed by electronic shipping documents, where exporters receive advance payments through stablecoin technology while importers settle final payments using a digital pound.

The blockchain partner will provide the underlying stablecoin settlement infrastructure, including currency conversion tools and digital wallets.

Findings to Guide Future Digital Pound Decisions

Results from the trial will feed into a joint assessment by the central bank and the Treasury on the digital pound’s next steps later this year. The lab does not use real customers or funds and does not indicate any decision has been made to launch a digital pound.