China’s CBDC Could Be A Big Threat To the Famous Gambling Platform Macau

The casino junkets at Macau have certainly seen better days, and the COVID-19 pandemic hasn’t exactly been helping. Most recently, though, the operators are under even more stress as China’s CBDC (Central Bank Digital Currencies), the digital yuan, may threaten their existence even further.

China currently leads the charge when it comes to CBDC, and the country continues to test out its digital yuan as we speak. Other nations such as France, Sweden, Japan, Australia and the United Kingdom also have plans to implement their own respective central bank digital currencies in the near future.

Macau under pressure

Beijing has been striving to put an end to any and all illegal and illicit transactions and activities, as well as money laundering schemes, for a while now. It hopes to accomplish this through the use of a fully traceable central bank digital currency, namely the digital yuan.

Macau is a gambling hub and independent territory on the south coast of China, right around the Pearl River Delta. It was a Portuguese region until 1999, and it represents a combination of various culturally diverse elements. It is a popular destination for tourists, of whom nearly 70% hail from the region of mainland China itself. However, the digital yuan could upset Macau’s business as not all of the activities and transactions that take place there are completely legal. Also, as a result of the ongoing global pandemic, revenue is down by almost 60% since 2019.

As of right now, thousands of people have been arrested on charges related to illegal cross-border gambling, putting a major dent in Macau’s day-to-day business activities and earnings.

An increase in Beijing intervention causes fear for casinos

A number of casino directors and executives are afraid that Beijing might impose an annual or even daily limit to transactions, which is admittedly something that would be made a lot easier through the use of a digitized currency such as the digital yuan. As a response, many customers have begun withdrawing their respective holdings in a panic, which has also resulted in problems related to liquidity.

A junket industry investor by the name of Luiz Lam stated that nearly all of the intermediary industries will either outright disappear or will gradually fade out and that this outcome is highly likely to occur. Some, however, feel that if the appropriate administration can feel a bit more comfortable with allowing more tourists to come to Macau, then a potential adverse effect might just be mitigated. “Simply put, if Macau is unable to adequately control and manage the environment, then China is very unlikely to provide the tourists”, said an anonymous industry participant.

Leave a Reply

Your email address will not be published. Required fields are marked *