The Payment Expert Podcast discusses Phase 2 of the Bank of England’s Digital Pound Lab, the first test in which a stablecoin and a simulated digital pound settle the same cross-border payment
The Bank of England moved its Digital Pound Lab to Phase 2 on August 12, 2026, and selected Polygon Labs, NOBO Finance, and Dun & Bradstreet as part of a twelve participating consortia.
The group is testing whether a public stablecoin and a simulated digital pound can settle the two parts of the same trade payment in a single transaction. Phase 1 ran from August to November 2025.
In the latest episode of the Payment Expert Podcast, host Louis Thompsett is joined by Senior Business Journalist Callum Williams to discuss how the UK is testing central bank digital currency and stablecoin rails together, and how that approach differs from other markets.
Williams said that no country the size of the UK has tested a CBDC and a stablecoin as parallel payment rails. China is prioritising the digital yuan and restricting private cryptocurrencies, he said, while the U.S. is regulating stablecoins through the GENIUS Act and the Federal Reserve is legally prohibited from issuing a CBDC.
The Lab follows the stablecoin policy statement and draft code of conduct that the Bank of England published on June 22, 2026, which included a temporary issuance cap of £40bn ($54bn) per systemic stablecoin and set the stage for regulated sterling-pegged stablecoins by 2027. The Lab is not a regulatory sandbox and does not use real customers or real money.
Digital Pound: Why banks are choosing tokenised deposits
The team discuss why many banks prefer tokenised bank deposits over private stablecoins, which they do not control. Tokenised deposits operate within the same banking infrastructure as a fiat deposit, with comparable speed and costs, and banks can earn interest on them.
Findings from Phase 2 will inform a go/no-go assessment by the Bank and HM Treasury later in 2026.
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