A comment made by Chief Executive Ho Iat Seng in mid-April detailing Macau’s plans to amend its financial laws to allow for the introduction of China’s Digital RMB as an official currency indicate an important change of policy direction by the Macau SAR Government.
Beijing is planning to introduce its Digital RMB into the Chinese economy by 2024 and has been conducting pilot programs in cities and provinces such as Shenzhen, Guangdong, Suzhou, Chengdu, Sichuan and Xiong’an since 2019.
But until now there had been no clarity around whether Macau (or Hong Kong for that matter) would follow suit – potentially adding a fourth currency into Macau’s widely accepted basket of currencies alongside the official Macau pataca and the widely circulating Chinese yuan and Hong Kong dollar.
In fact, Macau’s government has regularly dismissed the possibility of introducing cryptocurrencies into the SAR, including in 2018 when the Monetary Authority issued a public warning following reports that a local firm had started promoting a cryptocurrency called Dragon Coin.
“The Macau Monetary Authority reminds local residents that virtual currencies are a ‘virtual commodity’ and not legal currencies or financial instruments,” it said. “Attention should be paid to preventing fraud or being exploited for criminal activities.
“The Monetary Authority of Macau reiterates that any institution that provides regulated financial services … such as currency exchange, cross-border fund transfer or the provision of financial trading platforms, violates the relevant provisions of the Financial System Act.”
Such attitudes seem to have changed in 2021.
“We will keep communication with the People’s Bank of China and start a feasibility study around launching the Digital RMB in Macau,” Ho told the Legislative Assembly in April. “Therefore, we need to add provisions in relevant law to allow for the introduction of digital currencies.”
That the Chief Executive has revealed he is now open to the introduction of a cryptocurrency, even if it is one backed by China, represents a significant change of tune when it comes to Macau’s financial future.
Certainly it would be a game changer for the city’s casinos – and not necessarily in a bad way, despite a Digital RMB providing Beijing with greater oversight of money flow. While a Digital RMB is seen as potentially a killer blow to Macau’s already embattled VIP industry, analysts believe it will in fact boost the more lucrative premium mass and premium direct segments even further by eliminating intermediaries and making money transfers faster and easier.
It could even be the first step towards the legalization of online gambling in Macau.
Much like the concept of cryptocurrencies themselves, Macau’s authorities have been famously resistant to legalized online gambling in the past, but have also softened their language around that hot topic in the wake of COVID-19, which saw gaming revenues plummet by around 80% in 2020.
Asked by IAG last year if this meant online gambling was now in the conversation, the DICJ replied, “The government would listen to any suggestions that would help the development of the industry. However, due to the risks of gambling through the internet or telephone, the government must carefully study the judgment.”
Macau, it seems, is finally moving with the times.
