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Practices and Experiences of Regulatory Sandbox in Financial Innovation of the United Kingdom and the United States (Special Issue, No.73, 2019)

( drc ) 2019-12-04

By Zhang Liping & Xu Yan, Research Team on “China’s Financial Technology: Status-quo, Trends and Development Strategy,” Institute of Finance Research, DRC

Research Report, Special Issue, No.73, 2019 (Total 1701)


Abstract: Regulatory sandbox has drawn references from clinical trial concepts of the pharmaceutical industry to ease regulatory restrictions, support financial innovation and improve the efficiency of financial services. In 2016, the United Kingdom (UK) established the world’s first financial regulatory sandbox. It had received 118 companies as of April 2019, and has achieved positive effects in promoting the innovation of financial technologies. In contrast, the U.S. launched its regulatory sandbox much later and is still constrained by its regulatory framework and methods, leading to slow progress and intangible effects. According to the practices of regulatory sandbox in UK and the United States, the effects are different due to differences in regulatory frameworks, while it is worthwhile to launch regulatory sandbox trials on financial technology innovation. The role of the regulatory sandbox depends on effective communication and interaction between related government departments and enterprises. During the implementation, close attention is needed towards impacts of the innovation of financial technology on financial stability and consumers’ interests.

Key words: regulatory sandbox, innovation of financial technologies, practices of the United Kingdom and the United States