Macau may soon be testing a virtual currency, as part of a plan to embrace a digital economy. Chief executive Ho Iat Seng announced that the city could start testing the virtual currency as early as this year.

In recent developments, local lawmakers passed a law giving digital currency the same legal status as traditional banknotes and coins. The Macau Monetary Authority confirmed that the People’s Bank of China (PBOC) is currently working on research and development for the virtual currency.

Ho mentioned that the PBOC aims to present a prototype with basic functions by the end of 2024. The plan to create and issue the virtual pataca, or e-MOP, was first laid out in 2022. The goal is to integrate Macau into the global digital economy, aligning it with mainland China and the Hong Kong SAR.

This initiative is in line with the government’s “1+4” program, launched in 2023. The program aims to diversify Macau’s economy by focusing on four emerging sectors: finance, technology, health, and meetings and conventions.

Ho emphasized the importance of this strategy in reversing the dominance of the gaming industry and promoting a more balanced economy. The move also reflects Macau’s ambition to become a “smart city”, utilizing technology to enhance municipal management.

Although the official currency of Macau is the pataca, most casino transactions are conducted in Hong Kong dollars. The introduction of a digital renminbi, or yuan, by China is viewed as a measure to combat financial crimes like money laundering, tax evasion, and terrorism financing.

According to industry expert Muhammad Cohen, the introduction of a digital renminbi in Macau could help mitigate illegal funds transfers from the mainland and address concerns about capital flight. Despite crackdowns on cross-border gambling and illicit money exchanges, high-rollers are still willing to spend big at casinos, as evidenced by a recent study.

The study revealed a significant increase in average wagers by VIP gamblers, with a total of HK$43.3 million wagered by 228 VIPs through September, marking a 43% increase from the previous year. Despite these developments, businesses in Macau are still required to accept physical cash as a form of payment, ensuring that the traditional currency remains a key component of the city’s financial ecosystem.