In the current environment in which we are immersed, finance and the evolution of finance continue to play a significant role. Financial services are increasingly being provided with a more effective technological component, attracting the attention of financial and supervisory authorities worldwide. The continuous regulatory capacity posed by FinTech and new business models is a real challenge for the different authorities using test environments or regulatory sandboxes.
With the above, understanding regulatory sandboxes as financial supervision mechanisms is clear. By using the regulatory sandbox as a test bed, authorities can supervise and test new financial technology products within a regulatory framework with specific regulatory requirements.
In addition to the upstream work on market stability, the importance of regulatory sandboxes lies in the possibilities for authorities to work on the following aspects:
- They mitigate and adapt different regulations to specific innovative projects without compromising viability.
- Facilitating supervisors’ understanding of the new activities being developed.
- Rapid adaptation of regulations to financial reality, providing legal certainty to the financial sector.
The importance previously introduced must be based on a regulatory sandbox scheme with some basic and essential characteristics represented by:
- Intersectionality: projects linked to banking and the insurance sector, for example, are admitted.
- Open to new players.
- Contemplation of genuinely innovative services.
- Projects are ready to be tested.
- Justification of access to new criteria.
- Contemplation of test parameters established ad hoc.
- Fixed duration of tests.
- Monitoring of liability for damages.
- Application of the principle of proportionality.
- Provision of exit mechanisms for regularisation of activity.