PIRI publishes Pacific Regional Regulatory Sandbox Guidelines
AFI’s Pacific Islands Regional Initiative (PIRI) has published its landmark Pacific Regional Regulatory Sandbox Guidelines, a marker aimed to help not only the Pacific but also other regions looking to encourage innovative financial technology (FinTech) solutions that foster greater financial inclusion.
Seven central banks in the PIRI region produced the guidelines: Banco Central de Timor-Leste, Bank of Papua New Guinea, Central Bank of Samoa, Central Bank of Solomon Islands, National Reserve Bank of Tonga, Reserve Bank of Fiji and Reserve Bank of Vanuatu with support of AFI staff.
Expressing his encouragement for the sandbox – the world’s first regional regulatory sandbox – Bank Papua New Guinea Deputy Governor Joe Teria said: “We are innovative when we find ways of removing barriers from one island to another, but it needs to take place in a safe environment. Otherwise, we challenge our regulatory framework, which has been built up over many years.”
By acting as a regional bloc rather than individual markets, countries participating in the sandbox should provide interested startups and FinTech companies with access to a larger and more diverse market, as well as greater potential within a well-defined, regional regulatory structure.
The PIRI sandbox guidelines outline the rationale and objectives of the sandbox as well guidance for potential applicants on the requirements, information, stages and procedures governing the application and approval processes.
Applicants must submit their application for review by PIRI regulators subject to their sovereign legal framework via the sandbox’s online portal, which is expected to be launched by end 2020. Successful candidates are then given the green light to enter an experimentation stage, which involves testing in a live production environment bounded by clear measures to safeguard consumers.
Target applicants include for-profit or non-profit companies interested in using innovative technology that supports or offers regulated financial services in participating countries to improve the access, use and quality of financial services and promote financial inclusion.
Ahead of the release of the guidelines, AFI staff made in-country visits to all seven members to capture the processes and country specific requirements for the operations and governance of the sandbox. It also served to help PIRI members establish in-country mechanisms and structures within their institutions to manage and operate the regional sandbox.
During these visits, which were held in November and December 2019, participants from central banks and external stakeholders in each country attended two day of meetings, with high level of engagement and participation. Discussions covered, among other topics, the safeguards, parameters and other predefined rules and conditions applicable at different stages of the sandbox.
The PIRI initiative is partially funded by UK aid from the UK government.
Officially launched in 2015 in Dili, Timor-Leste, PIRI aims to make formal financial services accessible to all Pacific Islanders through its unique model of south-south engagement and peer learning. Geographically dispersed islands, small populations and limited banking infrastructure all contribute to the region having one of the highest rates of unbanked persons in the world.