On December 18th, 2021, the 14th of the “Finance Supports the Grand Start of the 14th Five-Year Plan” serial salon, also the 4th “Global RegTech Cooperation Network” academic salon, jointly organized by the International Monetary Institute (IMI) of Renmin University of China (RUC) and Beijing Frontier Institute of Regulation & Supervision Technology (FIRST), and co-organized by RUC Fintech Institute, was held online. The theme of this salon was “Global Experiences and China’s Application of Regulatory Sandboxes”. Zhu Taihui, Deputy Director, Research Institute of JD Technology; and Shan Jianfeng, Head of Information Technology, National Internet Finance Association of China, delivered keynote speeches. Yin Zhentao, Director of Fintech Research, Institute of Finance & Banking, Chinese Academy of Social Sciences; Qiu Zhigang,   Associate Professor at School of Finance, RUC; and Yu Haohan, Deputy CIO at Baixin Bank (AIBANK), participated in the discussion. The salon was presided over by Yan Cui, Deputy Director of FIRST.

Zhu Taihui first delivered a keynote speech entitled “Global Experiences from Regulatory Sandboxes, China’s Practices and the Way Forward”. He pointed out that although different countries approach regulatory sandboxes differently, they share an increasing number of similarities in subjects of design, applicable objects, evaluative criteria, subjects of evaluation, risk control and exit arrangements. Mr. Zhu then shared his insights from the following three aspects.

First, regulatory sandboxes’ definition and international experiences from regulatory sandboxes. A financial regulatory sandbox is an innovative supervisory mechanism. It aims to provide a safe and controlled real-world testing environment for fintech innovations, implement whole-process monitoring and final evaluations of the innovations, and promote them to the society and the market if conditions are met. Global practices of regulatory sandboxes suggest that there is no one-size-fits-all solution to the design and implementation of regulatory sandboxes. Countries vary in subjects of design, applicable objects, evaluative criteria, subjects of evaluation, risk control and exit arrangements of regulatory sandboxes, but they share an increasing number of similarities in the aforementioned aspects.

Second, China’s adoption of regulatory sandbox. China’s regulatory sandbox has progressed significantly in number of pilot areas, projects and test subjects, and is covering increasingly wider technical fields. Moreover, the implementation of its regulatory sandbox has achieved positive results. However, the following three aspects remains to be optimized. First, the design and implementation of China’s regulatory sandbox should be better coordinated with the principle of competition neutrality and the principle of technology neutrality. Second, the division of labor between central and local Chinese regulators should be improved to give better play to the role of regulatory sandbox. Third, international experience and lessons should be drawn on to formulate regulatory sandbox guidelines or regulations, thereby improving the convenience and standardization of regulatory sandbox design and implementation.

Third, suggestions for regulatory sandboxes’ future development. First, regulatory sandbox should not only promote responsible fintech innovations, but also improve the benign interaction between financial innovations and financial supervision, and ultimately bolster the financing ability and efficiency of fintech companies. Second, the focus of test projects should shift from technological applications and improving the quality and efficiency of fintech innovations, to promoting innovations in financial services and enhancing the quality and efficiency of financial services. Third, regulatory sandboxes should not only be applied to promote responsible fintech innovations, but also to facilitate the optimization of financial policies and innovation of supervisory instruments.

In the discussion session, Yin Zhentao proposed three suggestions for regulatory sandboxes’ future development. First, the sandbox mechanism established by central regulators should be better coordinated with local sandbox pilots. Second, new application scenarios where technological innovations are advanced via sandboxes should be explored. Third, fintech companies should be able to comply with existing laws and regulations after they exit the sandbox. Qiu Zhigang viewed the regulatory sandbox from a fintech perspective and pointed out that regulatory sandbox stems usually from the advent of new but controversial technologies. In the development of fintech, risks, costs and benefits of technological innovations coexist. At present, the acquisition and use of big data are the major disputes because big data is the cornerstone of fintech but may give rise to privacy issues. The use of big data therefore needs to take into consideration both commercial value and personal privacy protection.