Date: September 23, 2024, 12:34h.
Last updated on: September 23, 2024, 12:44h.
Macau is set to develop a prototype of the “digital Macau dollar” by the end of this year, as announced by the Special Administrative Region’s (SAR) monetary authority (AMCM).
The digital currency is expected to be similar to the “digital yuan,” also known as Digital Currency Electronic Payment (DCEP), which was introduced on the mainland in 2020, backed and controlled by the People’s Bank of China and the central government in Beijing.
“To uphold the security and stability of Macau’s monetary system, the AMCM will conduct sandbox tests with the prototype system to explore Digital Macau Dollar’s application scenarios,” the authority stated in a report by Inside Asian Gaming. “It will assess various risks to formulate regulations suitable for Macau’s market and prepare for the official launch of the Digital Macau Dollar in the future.”
Government Control?
The introduction of a traceable, government-linked currency could impact Macau’s gaming sector by providing Beijing oversight over casino cashflows and limiting money movement out of the mainland.
This could potentially hinder Macau’s gambling industry, with stricter control over cash outflows and anti-money laundering efforts.
Currently, there is a US$50K annual cap on cash withdrawal from mainland China, as part of efforts to combat money laundering and capital flight.
An estimated US$600 billion is taken out of China by Macau gamblers annually.
The People’s Bank of China aims to use the digital yuan to combat money laundering, corruption, and improve financial transaction efficiency, while not entirely replacing cash.
Silver Lining
A shift to a digital economy in Macau may impact the VIP segment but could eliminate capital flight and boost mass-market spending at casinos, potentially eliminating the need for capital controls.
Macau is expected to have a new political leader in October, Sam Hou Fai, who aims to strengthen ties with Beijing and promote industry reform and innovation.
Sam Hou Fai believes that the casino industry in Macau needs to adapt to meet political and economic challenges.