The Bank of England Still Has No Public Test for the Digital Pound

What has continued is the experimentation. Polygon Labs, which develops the Polygon blockchain network, said on 11 Aug it had joined the Bank's Digital Pound Lab, a simulated environment where firms test what a central bank digital currency (CBDC) might be used for. The Bank had listed the company on its website since at least 23 Jun.

A retail CBDC is central bank money held directly by the public, as an electronic equivalent of cash. That is distinct from wholesale versions, which move central bank reserves between banks and where progress has been considerably faster. The contrast shows how central banks can report success in one and quietly abandon the other.

In written comments, the Bank said the Lab's work would contribute to its "thinking during the digital pound design phase," and that it expects "to publish more information on the outcome of the design phase, and any decision on next steps this year." It has not committed to introducing the currency.

The criteria that were never published

When a retail digital pound reached Parliament, two years after the Bank's first discussion paper in 2020, it was met with scepticism. Both the House of Lords Economic Affairs Committee and the Commons Treasury Committe queried whether it was a solution in search of a problem.

The Commons committee report, published in 2023, warned of privacy risk and accessibility, noting that 3.9mn UK adults are digitally excluded. It recommended that the government and Bank "set out in more detail, as soon as possible, the criteria they will use to inform that final decision." Nothing setting out those criteria appears to have been published since.

The doubt runs to the top of the institution. Governor Andrew Bailey said in Jun 2025 he remained "to be convinced that we need to create new forms of money such as Central Bank Retail Digital Currency." At the Mansion House dinner in July 2026 he sounded no more convinced, while allowing there "may be" a role for stablecoins, privately issued tokens pegged to a currency, and other tokenized assets. The Bank separately told Sandmark this month that tokenized assets would face the same prudential treatment as their conventional equivalents.

Retail pilots have mostly stalled

Central banks expected these currencies to keep public money in public hands as cash use fell, and to hold ground against private money arriving from outside the banking system. In emerging markets they promised to reach people without bank accounts and cut the cost of moving cash across scattered geography.

Adoption did not follow. The Bahamian Sand Dollar accounted for around 0.2% of currency in circulation as of Sept 2023, close to three years after issue. Jamaica's JAM-DEX stood at roughly 0.1% in Feb 2023. An International Monetary Fund study of Nigeria's e-Naira after its first year found average weekly transactions of around 14,000, equivalent to 1.5% of the wallets opened, meaning 98.5% went unused in any given week.

In the US, concerns that a CBDC would extend central bank control and surveillance led to a January 2025 executive order directing federal agencies to stop work. Congress went further: the 21st Century ROAD to Housing Act, enacted this summer, bars the Federal Reserve from issuing a retail CBDC until 31 Dec 2030, exempting privately issued dollar tokens that preserve cash-like privacy.

Canada, Australia, Norway and Sweden have all paused retail development. Brazil's central bank shelved its own retail plans this month in favour of smart-contract infrastructure, self-executing code that runs on a blockchain when set conditions are met. The Bank of England, the European Central Bank, the Reserve Bank of India, the Bank of Korea and the People's Bank of China are among the few still publicly exploring.

Wholesale work has gone the other way. The Bank for International Settlements reported in May that Project Agorá, run with seven central banks including the Bank of England, settled cross-border wholesale payments in seconds using tokenized central bank reserves. Australia published comparable results the same month, having already ruled out a retail version.

What the Lab is actually testing

In a video on the Digital Pound Lab website, friends in a chat app club together for a birthday present. Each contribution is held aside until enough is raised, then released at once. The Bank calls this a kitty. Another scene shows someone paying for an audiobook by the minute as they listen. The Bank said the objective was to test new capabilities including programmability, meaning money that can be told to move only under set conditions.

Polygon's consortium is doing something rather different. Led by NOBO Finance, a UK firm building trade finance infrastructure for small exporters, and working with business data provider Dun & Bradstreet, it has two workstreams. One tests whether stablecoins and a digital pound can operate together in a simulated cross-border transaction. The other builds what the consortium calls an SME Bankable Profile, a financial identity that a small or medium-sized business owns and can take to any lender when applying for credit.

"For digital money to actually move the world's trade, its different forms have to work together, public and private, central bank money and stablecoins," Polygon Labs CEO Marc Boiron said in a statement.

There is also a discrepancy in the timing. The Bank's own page for the Lab says the experimentation period would end in July. Polygon's announcement says it plans further exploration within the same phase. Neither Polygon Labs, NOBO Finance nor Dun & Bradstreet responded to Sandmark's requests for comment on the work.