Digital Currency Coming to Casinos in Macau
Macau could start testing a virtual currency this year as part of a long-term strategy to shift toward a digital economy, according to its Chief Executive, Ho Iat Seng. This move is in line with the region's broader economic goals, and last year, lawmakers passed a law granting digital currency the same legal status as traditional banknotes and coins.
A visual representation of digital cryptocurrency coins on display in front of a Chinese flag. (Source: Getty Images)
LISTEN TO THIS ARTICLE:The Macau Monetary Authority confirmed in September that the People's Bank of China (PBOC) is actively conducting research and development on the new digital currency. The PBOC is expected to present a prototype of the digital currency with basic functions by the end of 2024, according to Ho Iat Seng.
This timeline aligns with the end of his current term as chief executive. It is widely anticipated that Sam Hou Fai will replace Ho as the next chief executive following the expiration of Ho's term.
The initial plans to create and issue a virtual version of the pataca, known as the e-MOP, were first introduced in 2022. Government officials, in a memo to the Legislative Assembly at the time, emphasized that adopting a digital currency would integrate Macau into the global digital economy, putting the city on par with economic developments in mainland China and the Hong Kong Special Administrative Region.
Mainland China has been spearheading efforts to develop a digital version of its currency, the renminbi, or yuan. This initiative is aimed at addressing concerns about money laundering, tax evasion, and terrorism financing. Macau's move toward creating the e-MOP aligns with China's broader strategy for financial modernization and regulatory oversight. The collaboration between Macau and the People's Bank of China underscores the importance of the digital currency in ensuring a more secure and traceable financial system, which would help minimize illicit financial activities.
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Macau to Receive Economic Boost
The announcement of Macau's potential digital currency trial comes at a time when mainland China is making moves to support Macau's economy. On September 24, the People's Bank of China unveiled a series of monetary stimulus measures designed to bolster the economic landscape, including for Macau's gaming and tourism sectors.
Seaport Research Partners, a research firm, commented that these measures are expected to provide medium-term support for Macau's operators in these industries. However, despite the supportive initiatives, the platform lowered its gross gaming revenue (GGR) estimates for September due to recent weaknesses in the sector.
The stimulus measures announced by Pan Gongsheng, Governor of the People's Bank of China, include a range of financial interventions. These involve cutting short-term interest rates, reducing the cash reserve ratio that banks must maintain, lowering rates on existing mortgages, providing additional liquidity to brokers and insurance firms, and increasing share buybacks by state-owned enterprises listed on Chinese stock exchanges. These moves are intended to stimulate the Chinese stock market and provide more financial flexibility within the economy.
In response to these measures, Seaport Research Partners noted that the initiatives could improve market sentiment around both China and Macau. Vitaly Umansky, an analyst from Seaport, mentioned that the market's reaction to these steps has been positive, as expectations for substantial stimulus in the near term had been relatively low. While the measures may not resolve all of the current challenges facing Macau's economy, they are expected to provide a boost to the city's key sectors, including gaming and tourism.
The broader context of China's economic interventions and Macau's transition toward a digital currency reflects the government's commitment to modernizing its financial systems and adapting to global economic trends. By integrating the e-MOP into its economy, Macau aims to not only streamline financial transactions but also strengthen its position within the global digital economy.
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