Mulino unveils Financial Innovation Strategy

Treasury has unveiled a new Financial Innovation Strategy that will also establish a Financial Innovation Committee to support a coordinated whole-of-government approach to financial innovation.

Announced by minister for financial services Daniel Mulino, the Financial Innovation Strategy will repeal and replace the existing legislative regulatory sandbox framework to make it more flexible and will work through ASIC's existing relief powers.

The new Financial Innovation Committee will include government, regulators and industry and will work to identify and work through barriers.

The government will also seek to develop targeted sandboxes that focus on AI, tokenised assets, digital money and digital financial market infrastructure.

Mulino said regulators will consider opportunities to develop targeted sandboxes in priority areas such as AI-enabled financial services and digital financial market infrastructure.

"Innovation requires more than just the adoption of new technology. It needs the development of new products, services, business models and ways of working that improve outcomes for consumers, businesses and the broader economy," Mulino said.

"That will require clear strategic direction and sustained coordination between government, regulators and industry."

Mulino said the new committee will complement existing coordination mechanisms and support a coordinated whole-of-government approach to financial innovation.

"We are also modernising the Enhanced Regulatory Sandbox framework after the ERS review found the existing model has not delivered the level of use or flexibility industry needs," he said.

"The sandbox model allows industry to test innovative products and services with appropriate safeguards, while giving regulators practical insight into new technologies, barriers and future policy needs.

"We will replace the existing framework with a more flexible model that strengthens pathways from testing to adoption."