Macau intends to launch a retail central bank digital currency (CBDC) and connect it to mainland China’s digital yuan and Hong Kong’s e-HKD.
The Macau government is working with the Digital Currency Research Institute of the People’s Bank of China (PBoC) to advance the e-pataca, local outlets report. It intends to launch a prototype that features basic functions during the celebration of the 25th anniversary of Macau’s handover, set for December 20.
Macau is a Special Administrative Region (SAR) of China. Similar to Hong Kong, it operates under the ‘one country, two systems’ principle, and as such, it has its own economic and legal system independent of mainland China. This includes having its own currency, the pataca, although the Hong Kong dollar (HKD) is also widely used. Uniquely, the pataca isn’t issued by a central bank but by two commercial banks—the Bank of China (BOC) and Banco Nacional Ultramarino (BNU).
According to local reports, the BOC’s Macau branch will oversee the initial stage of the e-pataca, developing, issuing, and redeeming the CBDC. It will also operate the customer portal and digital wallets. BNU is expected to join in at a later stage.
Announcing the project, Lei Wai Nong, the Secretary for Economy and Finance, noted that the CBDC is important for Macau since digital payments “have become a vital transaction method in daily life, providing convenient payment options for both domestic and international travelers.”
Indeed, electronic payments have surged in recent years. In Q3 2024, Macau’s 700,000 residents transacted MOP$7.6 billion ($948 million) in 88 million transactions, a steep rise from the MOP$825 million (US$102 million) and 8 million transactions in Q1 2020. Advanced technologies like Tencent’s (NASDAQ: TCTZF) Weixin Palm Pay service, which allows users to make a payment by simply placing their palms on a scanner, have advanced digital payments.
For now, the payments will focus on local payments, but Nong revealed that the integration with the digital yuan and the e-HKD will lay the foundation for international payments.
“Looking ahead, we hope to connect different legal digital currencies, especially the digital pataca, renminbi, and Hong Kong dollar. This will make cross-border payments easier and create more opportunities, helping to bring the Greater Bay Area closer together economically.”
Macau heavily relies on its gambling industry, which contributes around 40% of its gross domestic product (GDP). The government estimates that bets totaling MOP$8 trillion ($998 billion) will be placed next year. It’s unclear how the e-pataca will impact this massive industry, which has traditionally relied on privacy for gamblers.
Watch: The state of play and what’s to come with CBDC
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