This Policy Brief aims to discuss the benefits and risks associated with implementing a regulatory sandbox on Central Bank Digital Currency (CBDC) in the Maldives. It also outlines the operationalization issues that the Maldives Monetary Authority (MMA) needs to consider, including the assessment of regulatory sandbox applications, the establishment of an internal MMA organizational structure, and the responsibilities and potential implementation challenges that may arise.
A regulatory sandbox is established by a regulator to facilitate small-scale testing of innovative products and services under special conditions. These conditions often include exemptions from specific regulatory requirements, while the regulator closely supervises the testing process. Sandboxes function as regulatory laboratories that enable regulatory authorities to observe and evaluate the outcomes of small-scale tests, allowing them to make data-and evidence-informed decisions when developing relevant legislation.
This Policy Brief further provides recommendations to the MMA and other government authorities on promoting CBDCs and other financial technology (FinTech) services/products. These recommendations emphasize the importance of establishing a regulatory sandbox and reviewing domestic legislations and regulations, among other measures. The recommendations promote the development of CBDCs and FinTech innovations in the Maldives while ensuring effective regulation and oversight to safeguard the financial sector and protect consumers.
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