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The Central Bank of Lithuania is now giving guidance and supervision to fintech start-ups and other businesses active in the field that are looking for an opportunity to test innovative offers in live environment. On October 15, 2018, the Lithuanian regulator has officially opened the submission of applications to the sandbox.
According to Marius Jurgilas, the board member of the Bank of Lithuania, the development of an innovation-friendly microenvironment is key element in the consistent strategy that is aimed at a faster and easier access to new financial solutions. The sandbox will allow ideas to spread with the speed of light, increasing the competition in the market for financial services, which will undoubtedly benefit the consumers, giving them a wider variety of choice and options.
The Bank of Lithuania steps in with the offer to provide consultations to the participants, who submit their application to the sandbox, giving them access to real consumers for testing the innovative developments. Moreover, the participants will be granted temporary exemptions from certain regulatory requirements that put constraints on their operation. After successful tests, companies will be able to switch to the usual business environment of the state. Importantly, the sandbox is not only open for the innovative start-ups, but also for the existing authorized financial institutions. Main criteria for the selection of applicants who are eligible for participation include the innovativeness of offered solutions and the scale on which they can be beneficial to the society. Regulations imposed on innovative services may often be unclear or too vague, which is the reason why the sandbox will be highly beneficial.
The intensive cooperation that regulators and innovative companies will be engaged in is projected to increase understanding of impact of innovation on consumers, help identify emerging risks, determine potential regulatory flaws and eliminate or reduce them, drafting legislation accordingly to the goals of developers. Fostering innovation in the financial sector is one of the Bank of Lithuania’s strategic directions for 2017–2020, which explains the creation and launch of this supervision program.