Polygon Labs is working with the Bank of England's Digital Pound Lab to test how a digital pound and stablecoins could settle cross-border payments, aiming to improve speed and efficiency for international business transactions
Polygon Labs, a US-based blockchain payments company, has joined the second phase of the Bank of England's Digital Pound Lab, focusing on how a digital pound and stablecoins might be used together to settle cross-border payments. The initiative aims to address longstanding challenges in international settlement, such as delays and reconciliation issues, by testing whether both a digital pound and a stablecoin can be used in the same payment flow without either party waiting for the other to complete their side of the transaction.
The Digital Pound Lab, launched by the Bank of England, began its first phase-known as the "Operation Stage"-between August and November 2025. This initial phase tested a limited set of use cases to evaluate whether a digital pound could enhance existing payment services. In the current phase, Polygon Labs is collaborating with NOBO Finance and Dun & Bradstreet to explore the technical and operational feasibility of simultaneous settlement using both a digital pound and a stablecoin. The consortium is one of twelve industry groups selected for this stage, which operates in a controlled environment without real customers or actual money transfers.
Testing Cross-Border Payment Infrastructure
Polygon Labs is responsible for the stablecoin settlement component, leveraging its Open Money Stack orchestration layer to manage the underlying smart contract infrastructure. The digital pound side of the transaction is settled within the Lab's simulated environment, allowing the team to experiment with digital pound mechanics without the risks or regulatory hurdles of a live pilot. According to Polygon Labs, this setup provides a unique opportunity to test how their infrastructure handles digital pound transactions in a controlled setting.
In a related experiment led by NOBO Finance, the consortium is developing a reusable credit profile for small and medium-sized enterprises (SMEs). This profile combines transaction data, Dun & Bradstreet's verified business identity and credit information, and Polygon-based smart contract infrastructure. The goal is to streamline credit assessment for SMEs engaged in cross-border trade, potentially reducing friction and improving access to finance.
Industry Context and Measurable Impact
Polygon Labs has already processed over $2.6 trillion in stablecoin transactions, highlighting the scale and maturity of blockchain-based settlement solutions. The Bank of England emphasizes that the Digital Pound Lab is not a regulatory sandbox and does not involve real-world payments, but the findings could inform future policy and technical standards for digital currency settlement. The UK's digital pound project is part of a broader global trend, with central banks and private firms exploring how digital currencies and tokenized money could reshape international payments.
Efforts to improve cross-border payment infrastructure are not limited to the UK. For example, India's Small Industries Development Bank has expanded invoice validation using MonetaGo's Secure Financing system, aiming to reduce fraud and improve credit access for SMEs, as covered in a recent report on digital payment innovation in India. These parallel initiatives reflect a growing recognition that digital infrastructure and verified data can address persistent inefficiencies in global payments and trade finance.
Understanding Simultaneous Settlement
Simultaneous settlement refers to the process where both sides of a cross-border payment are completed at the same time, reducing the risk that one party is left waiting for funds. In traditional correspondent banking, delays and mismatches can occur due to time zone differences, manual reconciliation, and compliance checks. By using programmable money-such as stablecoins and central bank digital currencies-settlement can be automated and synchronized, potentially lowering costs and improving reliability. However, these systems must be carefully tested in controlled environments to ensure they meet regulatory, technical, and operational requirements before being deployed at scale.
