- The expectation is that the first cycle of projects will be open for enrollment in the first half of 2021;
- The period of permanence in the regulatory sandbox, which will function as a kind of testing window, is one year, renewable for another year;
- Depending on the complexity of the project, a third year may be necessary.
Brazil’s Central Bank and National Monetary Council (CMN) approved on Monday the implementation of the regulatory sandbox, an environment in which companies – already regulated or not – will be able to test innovative projects for the financial system while subject to fewer rules and less monitoring.
The sandbox is relatively new, even globally, having begun to be implemented by the United Kingdom, Australia, and Singapore in 2016. The United Kingdom, which will serve as the benchmark for the sandbox model, opted for cycles or cohorts promoted by the Financial Conduct Authority (FCA).
According to the deputy head of the Financial System Regulation Department, Paula Leitão, the expectation is that the first cycle of projects will be open for enrollment in the first half of 2021.
In a press conference, she stressed that the sandbox is another action within the scope of the BC’s institutional agenda that seeks to increase competition and allow new business models in the country.
The period of permanence in the regulatory sandbox, which will function as a kind of testing window, is one year, renewable for another year. Depending on the complexity of the project, a third year may be necessary, underlined Paula, remembering that the rules related to the first cycle will still be defined by the Central Bank.
In a note to Reuters, the Central Bank stressed that it will have access to the results obtained and will assess the risks associated with the new products. If a problem is identified, innovation may be limited or even prohibited. But if the experiment is successful, large-scale marketing can be released.
The Central Bank will disclose the companies authorized to participate, as well as the projects that will be under its scrutiny. “What (the Central Bank) will not enter is the detail of the business model (being tested),” said Paula.
Translated by LABS