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Bank of England begins Phase 2 tests combining stablecoins and digital pound
The BOE will explore whether stablecoins and central bank money can run together in a single trade-finance payment flow using invoice factoring concepts, without involving real customers or money.
The Bank of England has moved its digital pound project into Phase 2, testing how public stablecoins and potential central bank money could work together for cross-border trade finance, according to CoinDesk.
In the BOE-led Digital Pound Lab, the work will examine a setup where stablecoins are used alongside a potential digital pound in a single payment flow. The experiment is designed to help inform how different forms of digital money could interoperate, but it does not involve real customers or real money.
The BOE is collaborating with NOBO Finance, Dun & Bradstreet, and Polygon Labs. The lab will also explore creating reusable credit profiles for small enterprises and using stablecoins alongside a potential digital pound for invoice factoring.
CoinDesk reports that the goal is to improve trade finance in ways that could benefit smaller businesses. Trade-finance delays can make it harder for those firms to prove creditworthiness and access funding, a point highlighted by Otto Jacobsson of the Digital Assets Association.