Photo by Md Khalid Rayhan Shawon, 2013 CGAP Photo Contest Photo by Md Khalid Rayhan Shawon

Regulatory Sandboxes: A Tool for Fostering Financial Innovation

Regulatory sandboxes can play an important role in fostering the innovation needed for overcoming the barriers to financial inclusion that keep poor and excluded customers marginalized from the formal financial system. Sandboxes allow regulators to base their regulatory response to innovations on the results of live experiments. In frontier cases, this helps regulators to make faster and better informed decisions on how to appropriately regulate (and supervise) new services and providers reaching the marketplace.

Not all jurisdictions need sandboxes. Their suitability depends upon the regulatory objectives, the flexibility of the existing regulatory regime, the resources and capacity of the regulator, and the types of innovations emerging in the market. Under certain circumstances, they have potential to speed the regulatory adaptation towards an enabling framework in support of inclusive, innovative finance. Explore CGAP’s resources for policy makers on the role of regulatory sandboxes. Learn (i) when a sandbox is a suitable solution and when other initiatives (an innovation hub, a FinTech office) may fit better, (ii) how to design a sandbox, and (iii) how to successfully run one.

Additional Resources

Regulatory Sandbox Global Repository

This global repository on sandbox resources is compiled from publicly available data around the world and features country policy documents, press releases, regulatory guidelines and reports.


Regulatory Sandboxes: Harnessing Innovation for Financial Inclusion

In this webinar, speakers discussed the usefulness of sandboxes in emerging markets and developing economies to advance financial innovations that benefit poor customers.