The Central Bank of Bahrain (CBB) has announced new regulations to create a regulatory sandbox for fintech start-ups and firms to test and experiment their banking ideas and solutions.

The framework provides a “virtual space” and it is open to existing CBB licensees and other local and foreign firms. The testing duration is nine months, with a maximum extension of three months.

Khalid Al Rumaihi, chief executive of the Bahrain Economic Development Board (BEDB), says: “In order to grow the fintech industry, we know we need to create an ecosystem in which entrepreneurs can innovate and test their ideas – and the introduction of sandbox regulations is one of the key steps towards ensuring that environment.”

To be eligible, CBB says solutions “need to demonstrate innovation, customer benefit, technical testing, and an intention to be deployed in Bahrain after the sandbox period ends”.

CBB is keen to show off its fintech ambitions, and cited its launch in 2014 of two new licence types – payment services and card processing services – marking the entry of non-banking companies into banking services. To date Bahrain has issued 14 licences for these two activities.

In a separate announcement, and as reported in March, BEDB, Singapore Fintech Consortium and Dubai-based asset management firm Trucial Investment Partners teamed up for a new ecosystem and regulatory framework to boost Bahrain’s fintech fortunes.