Regulatory sandboxes: Innovation and financial inclusion

Carmelle Cadet

Contents

Foreword

Preface

Preface

Introduction: Suptech/regtech defined: Payments, sandboxes and beyond

1.

The uncertain prudential treatment of cryptoassets

2.

US regulatory certainty versus uncertainty for crypto and blockchain

3.

Bermuda: Suptech and regtech supporting the risk-based approach

4.

Suptech: A new era of supervisory philosophy

5.

Cloud computing in the financial sector: A global perspective

6.

DeFi protocol risks: The paradox of cryptofinance

7.

IT transformation in the Prudential Authority of South Africa: A case study

8.

Making the vision a reality: Perspectives from the Monetary Authority of Singapore

9.

Lessons from Hong Kong through the lens of the HKMA

10.

Technological change: Is it different this time?

11.

The ECB’s suptech innovation house: Paving the way for digital transformation of banking supervision

12.

China’s financing opening up and regulatory convergence with the world

13.

Disclosures and market discipline: The promise of regtech

14.

Regtech and new derivatives developments

15.

Fintech and regtech: Leading the evolution and regulation of alternative investments

16.

The role of artificial intelligence and big data in investment management

17.

The promise and challenges of machine learning in finance

18.

Data privacy and alternative data

19.

Digital ID and financial inclusion

20.

Strategic technology: Regulation and innovation of CBDCs

21.

Regulatory sandboxes: Innovation and financial inclusion

22.

Technology and sandbox development innovation in a transitional market: A case study

23.

Developing the regulatory ecosystem: The evolution of stablecoin

24.

Central bank digital currency, regtech and suptech

25.

Digital dollar: Cryptocurrency for everyday commerce

26.

CFTC regtech implications for virtual currency trading

27.

Fintech, regtech, suptech and central bank decision making

The pressure to innovate and transform financial services comes at a cost. Central banks are continually tasked with designing strategic innovation frameworks, often without solid political commitment or the resources to foster implementation. Efforts to facilitate and enact national objectives, ranging from promoting job growth to enhancing financial and economic inclusion, represent common objectives. Pervasive challenges for central banks, in both transactional and developed markets, often reflect institutional and political roadblocks to implementation.

This chapter will describe sandbox innovation platforms and initiatives that can provide an actionable solutions. More than 30 countries are in various stages of informing and executing an action strategy to foster goals with a regulatory sandbox. Therefore, this chapter will also focus on how regulators can use application programming interfaces (APIs) and blockchain technology given their broad popularity in both payments and banking sectors, as well as their potential in digital currencies.

REGULATORY SANDBOX AS A CATALYST FOR FINANCIAL INCLUSION

Traditionally, a sandbox has been defined as follows. “A regulatory

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