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Macau’s government is working to implement a digital currency in order to tackle tax avoidance and money laundering in the casino mecca.
Macau is moving forwards with plans to implement China’s digital yuan, which may aid in the fight against tax evasion in the city-shadowy state’s gambling industry.
On April 13, Ho lat Seng, the Chinese island territory’s chief executive officer, told local lawmakers that the government intends to amend regulations to enable the supervised issuance of China’s digital yuan in order to encourage trials of the digital currency:
“We will keep communication with the People’s Bank of China and start a feasibility study around launching the Digital RMB in Macau. Therefore, we need to add provisions in relevant law to allow for the introduction of digital currencies.”
According to Ho, the use of digital currencies will help Macau combat tax avoidance and money laundering. The launch of the digital yuan has the potential to dethrone Macau’s pataca as the primary currency, especially if authorities decide to make its use mandatory.
Sanford C. Bernstein analysts stressed the heightened government attention that monetary flows in China’s Digital RMB would face:
“Digital RMB would allow greater government scrutiny and control over money flows. But it would also allow easier money transfer.”
Junkets are middlemen that provide Hong Kong dollar conversions and credit lines to Macau’s high rollers. They are apparently concerned about the introduction of China’s entirely traceable digital currency, believing that it would drive away high rollers, some of whom have suspected underworld links, to other jurisdictions. This may be disastrous for a gambling market still suffering from the effects of travel bans imposed by the global pandemic.
The Chinese and Macau governments allegedly find it difficult to trace taxable income in the market, but according to Reuters, gambling revenue reached $36.5 billion in 2019, with the junket industry accounting for half of it.
Despite their reservations, some agree that the adoption of China’s digital yuan could aid Macau’s recovery. On April 2, Victoria White of Inside Asian Gaming noted that the introduction of the digital yuan could make money transfers easier for the vast number of Chinese tourists who visit the gambling hub each year, as it eliminates the need for currency exchange and its related costs:
“Ultimately, this could boost overall consumer spending in the mass and premium mass markets, which are the precise segments that have been most affected by the drop in footfall and visitations since the start of the COVID-19 pandemic.”
Since late 2019, the PBoC has been conducting pilot trials of the digital currency in a number of Chinese cities. At certain ATMs, it can be exchanged for yuan one for one. Although the use of a digital currency is nothing new in an already cashless economy helped by apps like WeChat and Alipay, the transition to a globally recognised virtual currency strengthens the CCP’s capacity to track its citizens’ financial conduct.