In a bid to design an environment that supports innovative start-ups, the European Bank of Reconstruction and Development, Estonia’s Ministry of Finance and Estonia’s Financial Services Authority have embarked on the first technical assistance Fintech project in the country.

An inaugurating workshop gathered more than 35 attendees that represented a wide range of market participants including start-ups, banks and innovators. The country wants to style itself 'e-Estonia,' in much the same way that Malta - another offshore centre whose reputation hardly conjures up images of technical wizardry, or even of legitimate finance - is trying to style itself 'FinTech island.'

The EBRD's website states: "One key element is the establishment of a supportive regulatory environment. It sounds simple, but is in effect fiendishly difficult. It is all about finding the right balance. What better way is there to find out what is needed, what works and – equally important – what does not work in order “to make it easier for Estonian start-ups to innovate” than testing different approaches?"

With this in mind, the partners are working on Estonia’s first 'regulatory sandbox,' an odd term that generally means a relaxation of regulatory rules for FinTech start-ups, with heavy involvement by regulators. The Estonians believe that such 'sandboxes' facilitate innovation and enable firms to test – pursuant to a specific plan agreed and monitored by a supervisor – innovative financial products, financial services or business models with the result to bring such solutions to the market faster.

The EBRD site goes on to say: "Start-up participants receive feedback on their business model, access to technical expertise and ongoing support from the testing team after they pass the eligibility criteria. Regulators see greater competition introduced to the market due to ease of access as well as reduced time and cost for implementing innovative technologies."

Over the coming three months the EBRD, the Estonian authorities and, for some reason, the European Union will compare various elements of IT with one another and try to work out the best ways in which to set up the so-called sandbox.