MICROCAPITAL BRIEF: Bank of Ghana and Emtech Solutions launch regulatory sandbox to foster innovation in finance and financial inclusion

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The Bank of Ghana (BoG), the country’s central bank, recently launched a regulatory sandbox – a mechanism to test business models not covered by existing regulations, in partnership with the US financial technology (fintech) company EmtechSolutions. After a successful pilot phase, BoG adopted Emtech’s digital regulatory review and reporting platform, through which financial services providers can apply to deploy a given service. The central bank will also use the platform to assess and mitigate the risks posed by new services as they enter the market.

The objective of the program is “to harness the potential of technology to develop an efficient and inclusive financial services sector without compromising financial stability”. In particular, BoG anticipates innovation in artificial intelligence, data analysis and machine learning to improve various tasks, such as credit scoring, know your customer (KYC) procedures and the fight against money laundering. Both licensed and unlicensed financial services providers are encouraged to use the regulatory sandbox.

Emtech Solutions, founded in 2019, provides digital banking tools to central banks and financial service providers in developing countries, including digital payment solutions and the aforementioned regulatory sandbox platform. The company’s stated goal is to “enable financial inclusion by transforming financial ecosystems.”

Established in 1957, BoG has regulatory and supervisory authority over banks and other financial institutions in Ghana. The institution’s mandate is to “maintain general price level stability, ensure the efficient functioning of banking and credit systems, and support general economic growth.” Its activities include: (1) issuing monetary and fiscal policies; (2) act as a banker and financial adviser to the government; and (3) conduct annual on-site audits of microfinance institutions under its jurisdiction through its Other Financial Institutions Oversight Department. At the end of 2021, BoG had total assets of GHS 112 billion ($11.3 billion).

By Saulius Simonas Ramanauskas, Research Associate

Sources and additional resources

BoG Sandbox Regulatory Guidelines
https://www.bog.gov.gh/news/regulatory-sandbox-framework

BoG press release
https://www.bog.gov.gh/news/press-release-bank-of-ghana-regulatory-sandbox

Emtech press release
https://emtech.com/bank-of-ghana-goes-live-on-emtechs-regulatory-platform

Emtech homepage
https://emtech.com

LinkedIn profile on Emtech
https://www.linkedin.com/company/emtechsolutionsinc

BoG homepage
https://www.bog.gov.gh

Previous Brief from MicroCapital on BoG
https://www.microcapital.org/microcapital-brief-bank-of-ghana-issues-crowdfunding-policy

Did you know that MicroCapital publishes the MicroCapital Monitor every month? Learn more at https://www.microcapital.org/products-page/.

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