The State of Regulatory Sandboxes in Developing Countries

November 19, 2018

We review the emergence of a novel regulatory innovation called a ‘regulatory sandbox,’ designed to incubate innovation in the financial sector in a relaxed, but safeguarded regulatory environment. It also provides a symbiotic environment for innovators to test new technologies and for regulators to understand their implications for the financial sector and consumer protection.

While the concept has been embraced by a growing number of developed and developing world regulators, we describe where and how these sandboxes are being used in developing countries. We assess that for these countries, establishing thematic regulatory sandboxes which focus on specific national financial and developmental priorities - such as remittances - rather than spanning multiple national agendas may be preferred as a more efficient use of scarce resources.

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