Macau, Hong Kong accelerating toward digital currency adoption??

Jenny Ortiz September 24, 2024

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Macau, Hong Kong accelerating toward digital currency adoption??

China’s Special Administrative Regions (SARs), Macau and Hong Kong, are making headways in the development and implementation of their respective digital currencies. These initiatives mark a crucial step in modernising their financial systems.??

‘Digital Macau Dollar’ prototype to be launched

On Monday, the Monetary Authority of Macau (AMCM) announced plans to launch a prototype system for the “Digital Macau Dollar” by the end of 2024. This initiative coincides with the 25th anniversary of Macau’s reunification with China and aims to demonstrate the basic functions and applications of digital currency to the public.

To ensure the security and stability of Macau’s financial system, the AMCM will conduct sandbox tests with the prototype system. These tests will explore the potential use cases for the Digital Macau Dollar and assess various risks associated with its implementation. The results will help formulate appropriate regulations and prepare for a full-scale launch in the future. Experts suggest that the Digital Macau Dollar could follow a model like China’s digital RMB, fully backed and controlled by the central bank and government.

Hong Kong expands e-HKD pilot programme with Project e-HKD+??

Meanwhile, the Hong Kong Monetary Authority (HKMA) has initiated Phase 2 of its e-HKD Pilot Programme, Project e-HKD+. This phase, also launched on Monday, aims to build a comprehensive digital money ecosystem in Hong Kong. It will explore the practical applications of digital currencies, including the settlement of tokenised assets, programmability, and offline payment capabilities.??

Project e-HKD+ will involve 11 groups from various sectors, who will assess the technological and commercial viability of digital currencies in real-world scenarios. The HKMA has also established an e-HKD Industry Forum to encourage collaboration among industry stakeholders. This forum will focus on addressing common challenges and exploring advancements in digital currency technology.

Eddie Yue, Chief Executive of the HKMA, highlighted the significance of this project, stating that Project e-HKD+ signifies the agency’s commitment to digital money innovation. The findings from this phase, expected to be published by the end of 2025, will be instrumental in understanding the practical challenges and opportunities of implementing a scalable digital money system in Hong Kong.

Potential impacts on the gaming industry in the region

The introduction of digital currencies in Macau and Hong Kong could impact Macau’s gaming industry, especially since the Hong Kong dollar is widely used for gambling transactions in the region. The Macau government has expressed intentions to integrate digital currency as legal tender, although specific details remain unclear. It is yet to be determined whether the Digital Macau Dollar will be accepted in Macau’s casinos, a critical question for the local gaming sector.

With Hong Kong advancing its e-HKD pilot, there is potential for broader applications that could affect financial transactions between the two regions. The testing of offline and cross-border payments as part of the e-HKD pilot could provide valuable insights into how digital currencies might streamline and secure transactions in Macau’s gaming industry.??