Polygon joins Bank of England lab to test cross-border settlement

Polygon Labs has joined Nobo Finance and Dun & Bradstreet in phase two of the Bank of England’s Digital Pound Lab to test near-instant cross-border settlement between a stablecoin and a digital pound. Experiments will run in the lab’s sandbox to check whether both legs of a cross-border payment can complete within a single orchestration flow without one side waiting for the other.

Phase two follows the lab’s launch last year and the close of phase one earlier this year, when participants designed a payment workflow to explore conditional business-to-business payments for small and medium-sized enterprises. In the current tests an exporter pays in stablecoins while an importer settles in a digital pound. The digital pound leg will settle on the Bank of England’s simulated test rails, while the stablecoin settlement and the underlying smart contracts will run on Polygon’s network.

Polygon will supply the Open Money Stack orchestration layer on the Polygon network to handle the stablecoin settlement leg and link payment events through smart contracts. Nobo Finance is leading the portable credit identity use case for small businesses. Dun & Bradstreet provides verified business identities and credit data to anchor each profile. Polygon Chain will provide the on-chain infrastructure that lets a business profile travel with the payment.

The experiment will examine interoperability between public and private digital money, central bank money and stablecoins within a single payments flow, and will test whether on-chain identity and credit profiles can support trade finance for SMEs. The Bank of England’s Digital Pound Lab offers a controlled environment for hands-on testing that could inform any future retail central bank digital currency in the UK.

“Digital money needs to interoperate for global trade to work,” Marc Boiron, Polygon Labs chief executive, commented.

The lab will next measure settlement finality, transaction latency and the portability of business credit identities across jurisdictions within the simulated test environment.