Macau Advances Towards Digital Currency with Legal Backing

Macau's local lawmakers passed a law last year that grants digital currency the same legal status as banknotes and coins. In September, the Macau Monetary Authority revealed that the People’s Bank of China (PBOC) is engaged in research and development regarding this currency. PBOC Governor Ho said the central bank is expected to present a prototype with 'basic functions' by the end of 2024. Officials initially proposed the creation of a virtual pataca, or e-MOP, in 2022. In a memo to the Legislative Assembly, they stated that this move aims to integrate Macau into the global digital economy, aligning it with 'neighbouring jurisdictions, namely mainland China and the Hong Kong SAR.' This initiative coincides with the government's '1+4' programme, launched in 2023, which is designed to lessen the city's dependence on gaming by fostering growth in finance, technology, health, and meetings and conventions. Ho emphasized in a 2023 policy address that this strategy 'will essentially reverse the trend of one industry overshadowing other sectors' and underscores Macau’s aspiration to become a 'smart city' guided by data-driven municipal management. Although patacas serve as the official currency of Macau, Hong Kong dollars are predominantly used for transactions in casinos. China’s move towards a digital renminbi, or yuan, aims to address issues such as money laundering, tax evasion, and terrorism financing. Industry commentator Muhammad Cohen observed that gaming experts believe 'Beijing would welcome renminbi play in Macau.' He noted, 'Digital RMB would mitigate what Beijing sees as the most harmful financial side effect of Macau casinos: capital flight through illegal funds transfers from the mainland.' Despite a decline in VIP volumes due to heightened scrutiny on cross-border gambling and illicit money laundering, high rollers continue to wager substantial amounts. A recent Citigroup survey showed a 43% increase in average wagers by VIP gamblers, with 228 so-called 'whales' wagering HK$43.3 million (£4.8 million/€5.8 million/$6.5 million) through September. While the Chinese-Portuguese pataca remains the standard currency in Macau, the new digital-currency legislation mandates that businesses must accept physical cash as a payment method.