Digital Trust Centre accepted onto the Bank of England’s Digital Pound Lab (Phase 2)
The Digital Trust Centre has been accepted onto Phase 2 of the Bank of England's Digital Pound Lab. Over the coming months, our team will build a use case that explores how a future digital pound could support conditional payments in a B2B procurement context.
The Digital Pound Lab is an experimental platform run by the Bank of England that allows industry to test potential use cases for a digital pound. Phase 2 prioritises innovative use cases that demonstrate payment services that do not yet exist. Being selected to participate is a significant moment for the Centre, drawing on our leading research and applied work in digital trust, cryptography and distributed systems.
What we’re testing
Our use case will explore a procurement-to-pay workflow in which a digital agreement, funding, and settlement are cryptographically linked. We’ll be testing whether trade state – what was agreed, delivered and verified – can live on a distributed ledger, while payment state and settlement finality remain authoritative on the Lab’s demonstration ledger, drawing on its conditional payment capabilities including hash-locked release.
This is novel territory, and within the three-month Lab window we’ll deliver this core cycle end-to-end, along with the dispute resolution path.
“This is exactly the kind of problem digital public money should be tested against. We’ve spent years building the cryptographic primitives that make conditional, privacy-aware settlement possible – and now we get to put them to work exploring what could underpin the next generation of UK payments. It’s a genuinely exciting moment for Scotland’s digital trust ecosystem.”
Professor Bill Buchanan OBE FRSE
Director, Digital Trust Centre
Why this problem
Late payments and the cost of trade credit remain a structural drag on UK SMEs. The economic case is well-documented; what’s less explored is whether conditional payments via a digital pound can solve this challenge. That’s the question we’re putting to the Lab.
The point is not to replace existing payment rails. Faster Payments settles in seconds but offers no native programmability – no guaranteed reservation of funds, no atomic link between verification and release. Escrow services can reserve funds but introduce a custodial intermediary. We want to see whether a digital pound platform, with conditional payment primitives built in, can close that gap.
Why this work sits with the Digital Trust Centre
The Centre brings together leading applied research at Edinburgh Napier University, the University of Edinburgh, and the University of Glasgow, with deep capability in applied cryptography, distributed ledger systems, privacy-preserving technology and quantum-ready cryptography. Earlier work from our consortium – including a demonstration of central bank money settlement on a public network with finality, performance and resilience – was presented to the Bank of England at their DLT Challenge demo day in October 2025.
The Lab work will be delivered from the Centre’s sandbox environment at Edinburgh Napier University, and will run as part of our wider 2026 innovation programme. That programme is curated with the Centre’s Financial Services Industry Steering Group, chaired by Fintech Scotland, and includes an open innovation call inviting SME startups to propose components that form part of this project.
Trust is the precondition for participation in the digital economy, and the infrastructure that earns that trust has to be built, tested and proven somewhere. Increasingly, that somewhere is Scotland.
What happens next
We’ll share insights from our Lab participation as the project progresses, with the Bank showcasing outputs from the Lab later in 2026. Alongside the Lab work, the Digital Trust Centre runs a wider innovation programme exploring related challenges in digital trust and financial infrastructure. SMEs, financial institutions and partners interested in contributing to that wider programme are encouraged to get in touch with the team.
Read the press release here.
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