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Bank of Ghana launches regulatory Sandbox

BY: Graphic Business
Dr Ernest Addison — Governor, BoG

The Bank of Ghana (BoG) has launched a system designed to allow live, time-bound testing of both licensed and unlicensed innovations under the regulator’s oversight.

Known as the Regulatory and Innovation Sandbox, it follows a successful pilot implementation of the system in the last two years.

The Sandbox, developed in collaboration with EMTECH Solutions Inc, is in line with the bank’s commitment to continuously evolve a conducive regulatory environment that fosters innovation, financial inclusion and financial stability.

The system is designed such that start-ups which cannot afford licensing fees, for instance, are all allowed to join the Sandbox and launch their innovations under specific regulations.

A statement from the central bank said over the past two years and during the pilot, the use of digital financial services among Ghanaians has recorded remarkable increase on account of a raft of enabling policies introduced by the bank and the Government of Ghana under the national digitalisation agenda.

It said during that same period, Covid-19 restrictions had also driven the adoption of digital finance up, plus the emergence of several other industry technologies like blockchain, machine learning, artificial intelligence and more.

The statement said the central bank itself was currently piloting its own digital currency, the eCedi, and has also inculcated blockchain into the regulatory sandbox during the pilot.

Functions

“Against the backdrop of these developments, the Regulatory Sandbox is an opportune tool for harnessing the potential of technology to develop an efficient and inclusive financial service industry without risking financial stability,” the statement said.

It will serve as an enabling framework for small-scale, live testing of innovations by innovators; operating under a special exemption, allowance or other limited, time-bound exception in a controlled environment under the regulator’s supervision.

According to BoG, the Sandbox aims at, among others, fostering a deeper understanding of innovative products, services and business models by the regulator, allowing for potential improvements to legal and regulatory requirements to encapsulate emerging technologies, and ensuring careful monitoring and containment of any risks that may emerge.

The statement said the Regulatory Sandbox is open to all licensed financial institutions such as banks, Specialised Deposit-Taking Institutions, Payment Service Providers, Dedicated Electronic Money Issuers, Financial Holding companies and other Non-Bank Financial Institutions; and unlicensed FinTech start-ups that have innovative products, services or business models that meet the Regulatory Sandbox requirements.

Innovations eligible for the sandbox environment will have to satisfy categories such as: new digital business models not covered explicitly or implicitly under any current regulation; new and immature digital financial service technology; and innovative and disruptive digital financial service products that have the potential of addressing a persistent financial inclusion challenge.

How to get in

The statement said the Regulatory Sandbox Framework, user guide and access link to the platform can be found on its website to provide guidance and accessibility to interested licensed and unlicensed financial or non-financial institutions.

“Bank of Ghana, through this initiative, affirms its commitment to provide the enabling environment for innovation to promote financial inclusion, and facilitate Ghana’s digitisation and cash-lite agenda.

With support from FSD Africa, we will engage various stakeholders including industry groups, associations and innovation hubs,” the statement said.