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Difficulty: MediumViewpoint Attribution

Read the following passage:

In recent years, "regulatory sandboxes"—frameworks that allow financial technology (fintech) firms to test innovative products under relaxed regulatory oversight—have become popular among global financial authorities. Proponents of this approach argue that sandboxes foster innovation by lowering the barrier to entry for startups, simultaneously granting regulators early visibility into emerging technologies before they pose systemic risks. However, legal scholar Evelyn Garza contends that this optimistic view ignores the practical dynamics of sandbox participation. According to Garza, the application processes for these programs are so resource-intensive that they disproportionately benefit established financial institutions and well-funded tech giants, effectively exacerbating the very market concentration that proponents claim sandboxes alleviate. While it is true that sandboxes offer a controlled environment—a benefit that should not be readily dismissed—the structural advantages they afford to incumbents suggest that without significant reform, they risk becoming yet another mechanism for regulatory capture.

Based on the passage, which one of the following claims about regulatory sandboxes is explicitly attributed to Evelyn Garza?

  1. A
    Their creation was primarily driven by established financial institutions to stifle competition and maintain market concentration.
  2. The high resource demands of their application procedures provide an advantage to well-funded entities over smaller competitors.Answer
  3. C
    They grant regulators crucial early visibility into emerging financial technologies before those technologies can pose systemic risks.
  4. D
    They should be completely abandoned by financial authorities until their structural advantages for incumbents are entirely eliminated.
  5. E
    They offer a controlled testing environment, a valuable benefit that critics should not readily dismiss.

Answer

The high resource demands of their application procedures provide an advantage to well-funded entities over smaller competitors.
The correct answer accurately paraphrases the passage's explicit statement that, according to Garza, 'the application processes for these programs are so resource-intensive that they disproportionately benefit established financial institutions and well-funded tech giants.'

Step-by-Step Solution

1
Locate the portion of the passage that discusses Evelyn Garza's perspective.
Garza's views begin with 'However, legal scholar Evelyn Garza contends...' and continue through the sentence 'According to Garza, the application processes...'
Viewpoint attribution questions require isolating the specific textual evidence tied to the individual asked about in the question stem.
2
Analyze Garza's specific claim in that section.
Garza argues that the application processes are 'so resource-intensive that they disproportionately benefit established financial institutions and well-funded tech giants,' which exacerbates market concentration.
Understanding the exact nature of the claim helps distinguish it from the views of proponents and the author's own conclusion.
3
Evaluate the options against Garza's specific claim.
The option stating that high resource demands provide an advantage to well-funded entities perfectly matches Garza's point about resource-intensive application processes benefiting established institutions.
This confirms the correct answer while filtering out the viewpoints of proponents, the author, or distorted exaggerations of Garza's view.

Key Concept

Viewpoint Attribution
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Viewpoint Attribution

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