uring the first week of March of 2020, casinos in Macau reported a record drop in gaming earnings as they were facing the cost of shutting down their companies for 2 weeks to assist restrain the lethal coronavirus pandemic.
In order to struggle against money laundry and tax evasion, Macau has proceeded to the possible creation of a digital currency.
Chief Executive Ho Iat Seng said to lawmakers last week that the government plans to amend laws to regulate the issuance of a virtual legal tender. And added that the government will work with China’s central bank to “study the feasibility of issuing a digital currency.”
Bloomberg News reported in December that, even though no official design has been reported on how a digital currency would be applied, some junkets (businesses that deed as middlemen for Chinese high-rollers who make up half the city’s gaming earnings) are concerned by the application of a traceable, government-linked currency which would be the death blow for a sector previously restricted by the virus and tougher rules around high-stakes gambling. Several casino operators have been reached by Macau´s regulator to talk about the possibility of using a digital yuan to buy gambling chips.
In concordance with Ho, the aim of developing a virtual currency is to boost efficiency in reducing money laundering, tax evasion, and terrorism financing.
The scheme comes among a slow restoration from the fall in casino earnings caused by the pandemic travel curtail that kept profitable Chinese gamblers away.
According to an earlier note by Sanford C. Bernstein analysts led by Vitaly Umansky, the obligatory use of a digital currency as the unique choice for getting gambling chips would be negative for Macau casinos by simply eliminating the junket system. Mainly for the premium mass market, if a digital yuan becomes one of the options that offer easier access to money in the city, it would be a long-term positive the analysts said.
A Bloomberg index of Macau casinos rose 0.2% at the noon trading break in Hong Kong last week, trailing the benchmark Hang Seng’s 1.2% gain.
The People´s Bank of China, the first major central bank to issue a virtual currency, has trialed a digital yuan in several cities. For the Winter Olympics in Beijing in February 2022, a broader rollout is expected giving the effort international exposure.