Czech Republic seeks to 'unlock potential' of fintech

Thursday 26 May 2022 13:55 CET | News

The Czech Republic’s government has initiated a European Union (EU)-backed project to ‘unlock the potential’ of fintech applications and the use of data in financial services, according to Global Government Fintech.

Activity will involve a ‘feasibility study’ on data’s potential in financial services and the possible establishment of a sandbox ‘to allow fintech innovation on the basis of data sharing and usage’, according to an announcement from the Ministry of Finance.

The project is being financed by the EU through its Technical Support Instrument (TSI) – a funding programme providing technical support to EU member states’ reform agendas – and implemented by the Organisation for Economic Cooperation and Development (OECD), in cooperation with the European Commission’s Directorate-General for Structural Reform Support (DG Reform). The project was kicked off by the country’s deputy finance minister, alongside representatives of the Ministry of Finance and Česká národní banka (ČNB – Czech National Bank), as well as European Commission, OECD, and industry associations at a Ministry of Finance-hosted event in Prague. The project is linked to Chapter 1.4 of Czech Republic’s ‘National Recovery and Resilience Plan’. This is focused on digital technologies and aims to create sandboxes in regulated sectors in line with EU priorities.

The Czech Republic is gearing up to take over the rotating six-month presidency of the 27-member EU, which it joined 18 years ago, during the second half of 2022. The director of the Czech Ministry of Finance’s ‘Financial Markets III’ department, said that ‘unleashing the potential of data is the way for the Czech Republic and Europe to thrive in this new digital era’. The European Commission has just opened consultations on the ‘Open Finance framework and data sharing in the financial sector’, as well as on the application and impact of the EU’s revised Payment Services Directive (PSD2).

An increasing number of countries worldwide are setting up sandboxes to help nascent fintech solutions. Within the EU, Global Government Fintech reported in April 2022 that the Cyprus Securities and Exchange Commission was considering establishing a regulatory sandbox, while Greece and Spain are among the member states where sandboxes have launched since 2021. Greece’s sandbox, run by the country’s central bank, was funded by the EU via DG Reform and implemented in collaboration with the London-headquartered European Bank for Reconstruction and Development (EBRD). 

Efforts are underway at EU level to improve communication about, and coordination between, different countries’ sandboxes, innovation hubs and other similar initiatives that aim to help fintech companies. Speaking last month at the launch of the EU Digital Finance Platform, a ‘collaborative space’ that aims to encourage interaction between European supervisory authorities and innovators, the EU’s financial services commissioner said that national supervisors ‘have made big efforts to improve what they offer to the companies they work with but have to go further’.

The European Digital Finance Association president suggested during a panel discussion (held as part of the same event) that the growing number of EU-backed sandbox initiatives could leave companies uncertain about which regimes or procedures to follow. She referred to the Commission’s AI act proposal (unveiled in 2021), which pushes for AI sandboxes, and the plan to create an EU ‘blockchain sandbox’.

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Keywords: regulation, Open Banking, Open Finance
Categories: Banking & Fintech
Countries: Czech Republic, Europe
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