Beijing’s attempts to better control money laundering and illegal transactions with the central bank’s fully traceable digital currency could threaten the country’s popular gaming hub in Macau.
This is a hotspot for tourists – 70% of them come from mainland China – gambling in the region could be negatively affected by China’s use of the digital yuan to curb illegal economic flows and more completely close the capital account.
Macau’s unwanted casinos – longtime recipients of Macau’s status as the only administrative region in China where gambling is legal – have already been curtailed during the coronavirus pandemic. Reuters said it was down to around 60% from 2019.
Informal brokers and opaque financing channels linked to the online gambling and scrap industry in Macau are now closing, and tens of thousands of people are reportedly being arrested for illegal cross-border gambling.
Some casino executives fear that Beijing will set a daily or annual limit on transactions – which will be easier to implement with the official digital currency – and increase the threat to the industry’s health. Customers are reported to have responded to increasing pressure from Beijing by speeding up the removal of their assets from unnecessary ships and causing liquidity problems.
“All of these intermediate industries will disappear or disappear immediately, and this is a very likely outcome,” said Louise Lamm, an investor in the scrap industry, about the austerity measures.
However, others argue that the potential negative effect can be reduced if the administration feels more comfortable allowing more tourists to visit Macau. An industry player who asked not to be called told Reuters:
“If Macau can not control the environment, China will not give us tourists.”
The casino’s manager, whose name is not named, said that stricter control of the center was “a policy at such a high level [that] no one can do anything. We just need to follow the right method and as an operator make sure that our systems are compatible. “.
Robert Goldstein, chairman of the board of Las Vegas Sands and Macau Sands in Macau, said the changes could be “very positive for the Macau market as it (…) becomes more integrated in China and more consumer-friendly.”
The Chinese digital yuan has already been piloted in several regions and cities, including Suzhou, Shenzhen, Chengdu, Cheonan and Macau, and appears to be poised for the digital currency agenda. CEO Hu Ayat Singh told the region’s lawmakers that Macau is following the pace of the mainland, and that the Macau Monetary Authority is reportedly adjusting its legal framework to accommodate the digital yuan in cooperation with China’s central bank.
Meanwhile, Iole Codeville, a Hong Kong-based financial technology consultant, argued that while the digital yuan is “very important to casinos in terms of cash flow control […], the introduction should also be seen in the broader strategic context of increasing digitalisation. and diversification of the financial sector. In Macau.