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Supporting FinTech Innovation in the Czech Republic

Regulatory Sandbox Design Considerations

image of Supporting FinTech Innovation in the Czech Republic

EU Funded Note

The FinTech sector is a nascent market in the Czech Republic, with only around one hundred regulated or unregulated FinTech firms. This report analyses the Czech FinTech ecosystem and identifies possible hurdles to innovative development. The report also provides recommendations for designing a regulatory sandbox tailored to the country’s specificities and which could help alleviate some of the impediments to FinTech development. A sandbox could enhance the Czech authorities’ understanding of the impact of innovative mechanisms on financial activities, and enable supervisors to better monitor and ensure compliance of FinTech activities. It could also enhance communication between firms and authorities through targeted dialogue and customised guidance.

English Also available in: Czech

Background to innovation facilitators

In order to better understand new FinTech activities, business models, hazards, and motivations, the numerous platforms for regulatory outreach to the FinTech industry have become increasingly institutionalised through “innovation facilitators” that have taken different forms, depending on the jurisdiction, and mostly taking the form of innovation hubs and/or sandboxes. As it has been recommended in a number of OECD jurisdictions, including the European Union (EU) and the United States, it is important to consider the integration of specific entity-based regulations to address the emerging policy problems (Carstens et al., 2021[1]). Each jurisdiction has a distinct FinTech flavour which is influenced by these initiatives and the larger regulatory environment, and regulatory sandboxes have already become mainstream (Ahern et al., 2023[2]).

English Also available in: Czech

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