NextGen Day

Institutions and businesses governed by the Bangko Sentral ng Pilipinas can now test and make some novel items available in a controlled setting that may eventually be helpful for the local financial system.

The test and learn (T&L) approach, which has been in place since 2024, allows BSP Supervised Financial Institutions (BSFIs), third-party service providers, and new financial institutions to use it in testing new products without endangering the stability of the financial system. The Monetary Board (MB), the central bank’s policy-making board, approved the regulatory sandbox framework.

Bangko Sentral Governor Felipe Medalla says the central bank “has always championed responsible innovation since we regard it as a catalyst to promote efficiency in the financial system and expand financial inclusion.”

He continued, “We are deeply committed to ensuring that associated risks associated with employing new technology are adequately controlled by enabling and responsive policies.

According to the BSP, the Framework’s sandbox features a four-stage procedure that includes application, review, testing, and exit options. After 12 months, it will be determined whether or not the process is “suitable for broader or mass adoption.”

It stated that “the regulatory sandbox projects’ insights will inform the creation of the policies required to control the activity inside and around new or emerging financial solutions.”

The Regulatory Sandbox Lite, which has a shorter evaluation period, may be recommended to institutions applying to test a specific product using the same Framework. Still, only for “items or services that are already within the scope of existing rules,” it was stated in relation to this.

By giving these digital players a controlled environment to use technology and testing the limits of what’s possible, we can carefully balance the perceived benefits of these emerging technologies while managing associated risks, according to Medalla. “Moreover, this will promote a level playing field for relevant stakeholders who share the Bangko Sentral’s goal of promoting the welfare of Filipinos by maintaining a safe, secure, and truly inclusive financial system,” he added.

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