Collaborative approach in developing regulations for mobile money in Sri Lanka

Abstract

Mobile money brought bank-like facilities through low-cost operations and extensive agent networks to unbanked communities. Regulatory responses and support are essential, requiring significant changes to current regulatory practices. Due to their limited technical knowledge and financial technology resources, regulators worked with industry to overcome these challenges. Such collaborations are scarce. This study proposes a model for mobile money collaborative regulatory development. Actual practices were mapped with negotiated rulemaking theory to derive variations and extensions to the original theory. Regulators appointed a discussion committee with broader representation for objective decisions. Throughout the negotiation process, the central bank maintained close control; participants are motivated to compromise their interests to achieve joint gains. Findings reveal that collaboration gave participants the necessary knowledge and information to develop effective regulation. The central bank composed the executable rule through collaboration. Subsequent revisions are also key to regulatory development. These revisions were developed with stakeholder involvement as suggestions and comments. Mobility regulation also observes collaborative testing and benchmarking. Specialized subcommittees will further improve the negotiation process.