The global economy is evolving rapidly, influenced by Industry 4.0 and digitalisation that has been accelerated by the pandemic. Prior to the pandemic, to facilitate economic transformation and maintain Singapore’s competitiveness as a financial hub, the Ministry of Finance and the Monetary Authority of Singapore had resorted to using regulatory sandboxes to create a safe space for emerging start-ups and established financial institutions to experiment in the fintech space. A regulatory sandbox is a regulatory approach that enables live time-bound testing of innovations under a regulator’s oversight.
Pioneered in the United Kingdom (UK) as part of the Financial Conduct Authority’s (FCA) “Project Innovate”, a regulatory sandbox is a “safe space” in which businesses can test innovative products, services, business models, and delivery mechanisms without incurring regulatory consequences. Since its inception in the UK, regulators around the world have adopted the sandbox concept in various forms. Sandboxes now appear in many jurisdictions, with Asia taking the lead. There are these sandboxes in Australia, the United States, Canada, Switzerland, Malaysia, South Korea, the United Arab Emirates, Hong Kong, Singapore, and Thailand.
Why establish regulatory sandboxes? The key reason is that it creates a conducive and contained space where incumbents and challengers could experiment with innovations. Arguably, extending the concept of the regulatory sandbox beyond the financial industry could potentially reduce the costs of innovation by reducing barriers to entry and enables regulators to collect important results and insights before deciding whether further regulatory action is necessary. Furthermore, regulatory sandboxes may strengthen the capacity of regulators as it facilitates a more open and active dialogue with innovators.
The aim of this closed-door discussion is to examine how the concept of regulatory sandboxes could be implemented across a wider range of regulatory domain(s) in order to catalyse innovation. Some of the themes and questions to be considered includes the following; First, can regulatory sandbox be extended beyond financial industry for all new innovations (e.g., rather than current regulations barring all drones, can we have a physical sandbox for drones piloting and test bedding. Second, what about healthcare, telecoms, IOT, water, environmental, maritime test bedding etc). For example, what needs to be revised to enable more innovation and enablement? Third, what are the best practices and useful lessons which we had learnt from financial sandboxes? Fourth, which measures works well within the regulatory sandboxes?
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