The National Bank of Georgia (NBG) published a Draft Regulation on Establishing Regulatory Laboratory (Sandbox) Framework (hereinafter - Regulation) for public discussion as part of the technology development support approach.
Draft regulation on establishing regulatory laboratory sandbox framework
By Nika Gamtsemlidze
Thursday, February 20
Sandbox is a framework set by the Supervisor. It allows financial institutions under the supervisory authority of the NBG and any other interested entity to test an innovative service or product in the supervised environment and the real-time regime.
Sandbox is to clarify if innovative financial services and/or products, created in terms of rapidly developing financial technologies, comply with the requirements set forth by the NBG within its supervisory mandate, to identify the need for new regulatory requirements, to test innovative financial products and facilitate their development in the market. Mentioned innovative service and/or product should not contain systemic risks.
The Regulation specifies the necessary documentation that the NBG may require from an applicant based on the use of specific innovative technology. If necessary, the documentation may also include a plan to terminate the use of innovative technology.
Successful use of the Sandbox implies completion of three pre-defined stages: Idea Testing, Concept Testing and Test for product application in the Real Environment. After successful completion of these three stages, if necessary, the NBG will consider the reflection of the new technology use rules in the supervisory framework and supervisory approaches.
The regulation defines the main principles, usage terms and procedures for establishing and operating Regulatory Laboratory (Sandbox) by the National Bank of Georgia.
The purpose of using Sandbox will be facilitating compliance of innovative financial services or products developed in conditions of rapidly developing financial technologies with the supervision requirements set by the National Bank of Georgia, identification of the need for new regulatory requirements, testing innovative products of the financial sector on the market and supporting their development.
The Sandbox defined under the present Regulation can be used by the representatives of the financial sector, subject to the National Bank’s supervision, as well as by any entity having an interest in the application of new technologies in the financial sector to create innovative financial service.
The National Bank of Georgia published drafts of normative acts related to supervision to increase the transparency of the financial sector supervision. All Stakeholders have the opportunity to submit their opinions and comments to NBG. The authority of NBG to publish drafts of normative acts related to the financial sector is prescribed by the amendments made to the Organic Law of Georgia on the National Bank of Georgia.