Macau continues to prepare for the rollout of China’s digital yuan, which could help tackle tax evasion in its opaque gambling industry.
On Tuesday, Ho lat Seng, CEO of the China Island Territory, told local lawmakers that the government plans to change the legislation allowing for the regulated issuance of China’s digital yuan to facilitate trials of the digital currency:
“We remain in touch with the People’s Bank of China and are starting a feasibility study on the launch of the Digital RMB in Macau. Therefore, we need to add provisions in the relevant legislation to allow for the introduction of digital currencies. “
According to Ho, the introduction of digital currency will help Macau fight tax evasion and money laundering. The introduction of the digital yuan could overturn Macau’s pataca as the main currency, especially if authorities decide to mandate its use.
Analysts at brokerage firm Sanford C. Bernstein highlighted the increased government scrutiny that will affect cash flows in China’s digital renminbi:
“Digital RMB would allow the government more control and control over money flows. But it would also allow for easier money transfer. ”
Junkets are middlemen who provide Hong Kong dollar conversions and lines of credit for Macau high rollers. They are reportedly concerned about the adoption of China’s fully traceable digital currency and believe the move could deter high rollers, some of whom have alleged links to the underworld, with other jurisdictions. This could cause significant damage to a gambling industry already reeling from the effects of travel restrictions due to the global pandemic.
It is reportedly difficult for the Chinese and Macau governments to track taxable revenues in the industry, but according to Reuters, gambling revenues in 2019 were $ 36.5 billion, with the junket industry accounting for 50%.
Despite their concerns, others believe that China’s adoption of the digital yuan could help pave the way to recovery in Macau. Victoria White of Inside Asian Gaming noted on April 2 that the introduction of the digital yuan could ease money transfers for the large number of Chinese tourists who travel to the gambling center each year, as this would reduce the need for currency exchange and the associated costs. :
“Ultimately, this could boost overall consumer spending in the mass markets and premium mass markets, the very segments most affected by the drop in attendance and attendance since the start of the COVID-19 pandemic.”
The PBoC has been conducting pilot trials of the digital currency in various cities in China since the end of 2019. At some ATMs, the coin can be exchanged one-for-one against the yuan. While a digital currency is nothing new to an already relatively cashless economy, aided by the use of apps such as WeChat and Alipay, the transition to a nationally recognized digital currency enhances the CCP’s ability to track the financial activities of its citizens.