The role of sandboxes in promoting flexibility and innovation in the digital age

Digital technologies and data have unlocked new potential and disrupted entire industries. However, digitally enabled and innovative products and business models often differ significantly to those in traditional markets, and in some cases, they do not fit well with existing regulatory frameworks. In response, policy makers are increasingly experimenting. One approach to developing mechanisms that promote the flexible application or enforcement of policies is the use of regulatory “sandboxes”, which may be particularly useful for certain kinds of digitally-enabled innovation. This Going Digital Toolkit note discusses the emergence of regulatory sandboxes, analyses common characteristics, identifies potential benefits and challenges, and considers examples in several regulated industries across the OECD and beyond.