In a circular released on Monday to all Deposit Money Banks, Mobile Money Operators and Payment Service Providers, the Central Bank of Nigeria (CBN) said it will review the product and solutions being introduced by the institutions.

The circular titled ‘Issuance of the Framework for Regulatory Sandbox Operations,’ read, ““The Central Bank of Nigeria is committed to building a financial services sector that promotes stability, fosters innovation and deepen inclusion.

“In this regard, the CBN has implemented several reform initiatives towards the achievement of these objectives. In continuation of these efforts, the CBN hereby issues the framework for the regulatory sandbox operations in Nigeria.

“The framework details the requirements for conduct of live tests on innovative products, services and other solutions in a controlled environment.

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“To this end, the CBN shall review the products and solutions of applicants (licensed institutions, fintechs, innovators and researchers) during its implementation.”

The CBN therefore instructed all stakeholders in the regulatory sandbox to ensure strict compliance with the requirements of the framework and all other payments system regulations, as it continued to monitor developments and issue guidance as may be appropriate.

The Apex bank further explained that the regulatory sandbox operation was aimed at increasing “the potential for innovative business models that advance financial inclusion; and to reduce time-to-market for innovative products, services, and business models.” adding that it would also “increase competition, widen consumers’ choice and lower costs; ensure appropriate consumer protection safeguards in innovative products; clearly define the roles and responsibilities of stakeholders and the operations of the sandbox for the Nigerian payments system industry.”

According to the CBN, other objectives of this plan are to ensure adequate provisions in regulations to create an enabling environment for innovation without compromising on safety for consumers and the overall payments system; and to provide an avenue for regulatory engagement with FinTech firms in the payment space, while contributing to economic growth.

The CBN stated that it deemed it pertinent to ensure new and more flexible ways of engaging with the industry.

“One of the options being the use of a regulatory sandbox which is a formal process for firms to conduct live tests of new, innovative products, services, delivery channels, or business models in a controlled environment, with regulatory oversight, subject to appropriate conditions and safeguards,” it stated.

CBN is optimistic that this would enable the bank to stay abreast of innovations while promoting a safe, reliable and efficient payments system to foster innovation without compromising on the delivery of its mandate.

It added that this framework defined the establishment, rules and operations of a regulatory sandbox for the Nigerian payments system to promote effective competition, embrace new technology, encourage financial inclusion and improve customer experience, with a view to engendering public confidence in the financial system.