Case study reveals structured interactions foster trust and regulatory learning in a non-waiver sandbox, suggesting social capital enables innovation governance without legal flexibility.
Regulatory sandboxes are promoted as instruments of innovation governance. However, within the EU, the scope for formal waivers remains limited. This paper shows how a non-waiver sandbox can still deliver governance outcomes by deliberately orchestrating interactions between regulators and innovators, contributing to debates on legitimacy and learning in tightly bounded regimes. Drawing on unique access to the Central Bank of Ireland's inaugural Innovation Sandbox on Combatting Financial Crime, the study analyses programme records, interviews, surveys, and observational data. Using Social Capital Theory as its framework, the findings identify three designed routines: relationship-manager brokerage, regulator-firm engagement cycles, and explicit boundary-setting. These routines built stronger ties, trust, and shared understanding between regulators and innovators, accelerating regulatory learning, enabling candid disclosure without compromising impartiality, and fostering a shared vocabulary for navigating complex obligations. Limitations around dataset realism and the absence of incumbents, such as retail banks and insurers, constrained outcomes to a proof-of-concept stage. The paper demonstrates that regulators function not only as constraint-setters but also as enablers, mobilising social capital as a regulatory instrument. Practically, it offers design lessons for sandbox initiatives, including those under the EU AI Act and beyond, showing how structured engagement can yield regulatory outcomes without legal flexibility.
No takes yet. Share an insight, caveat, or question.
Leonard et al. (2026) studied this question.
Synapse has enriched 5 closely related papers on similar clinical questions. Consider them for comparative context: