Establishing a Regulatory Sandbox to facilitate FinTech and Innovation in Greece
FinTech stands for Financial Technology and describes technologically enabled financial innovations that could result in new business models, applications, processes or products with an associated material effect on financial markets and institutions and the provision of financial services. FinTech is an important tool to improve the efficiency of the financial system.
In recent years, competent authorities in the EU have adopted various initiatives to facilitate financial innovation. These initiatives are designed to promote greater engagement between competent authorities and firms about financial innovations with a view to enhancing firms’ understanding of regulatory and supervisory expectations and increasing the knowledge of competent authorities about innovations and the opportunities and risks they present.
Two main categories of innovation facilitator can be identified (*):
1) Innovation hubs
: these provide a dedicated point of contact for firms to raise enquiries with competent authorities on FinTech-related issues and to seek non-binding guidance on the conformity of innovative financial products, financial services or business models with licensing or registration requirements and regulatory and supervisory expectations.
2) Regulatory sandboxes
: these provide a scheme to enable firms to test, based on a specific testing plan agreed and monitored by a dedicated function of the competent authority, innovative financial products, financial services or business models. Sandboxes may also imply the use of legally provided discretions by the relevant supervisor (with use depending on the relevant applicable EU and national law) but sandboxes do not entail the disapplication of regulatory requirements that must be applied as a result of EU law.
In March 2019, the Bank of Greece (BoG) set up an Innovation Hub
to enable FinTech, and later on became a member of the European Forum for Innovation Facilitators (EFIF), since its launch in April 2019. The Greek market could benefit further from a more enabling legal and regulatory environment to fully support innovation. To this end a Regulatory Sandbox within BoG, as a testing environment can bring positive results.
The BoG has thus requested support from the European Commission in establishing a Regulatory Sandbox to facilitate FinTech and Innovation in Greece. The project is expected to start in Q2 2020 and has an estimated overall duration of 18 months.
The Project is funded by the European Union via the Structural Reform Support Programme and implemented by the Local Currency and Capital Market Development team of the European Bank for Reconstruction and Development (EBRD) in cooperation with the European Commission’s Directorate-General for Structural Reform Support (DG REFORM) and the BoG