The use of China’s digital renminbi (RMB) in Macau casinos could lead the Beijing government to relax capital controls on financial transactions—a potential boon for the city’s main industry, according to a May 19 note from brokerage Sanford C. Bernstein.
According to Inside Asian Gaming, allowing cashless gaming via digital RMB has “gained traction over the past year” as China expands trials around digital currency.
The pilot was first introduced in 10 Chinese cities in 2020. The People’s Bank of China (PBOC) announced that it was expanding the program to 11 more cities from April 2022 as well as Beijing and Zhangjiakou City following the 2022 Beijing Winter Olympics.
The Bernstein team wrote, “If cashless gaming is adopted in Macau, China’s digital RMB could become an essential part of the infrastructure and provide an edge to allow seamless implementation of large-scale cashless play.
“In the case of Macau, digital RMB could potentially become a one-stop solution for both the casino and customers, dis-intermediate payment providers and simplify the process of currency and chip exchanges and eliminate any associated transaction costs.”
The note continued, “If digital RMB becomes a legal tender in Macau, a mainland Chinese customer would be able to directly use digital RMB for casino play without going through the usual process of converting RMB into HKD (Hong Kong dollar) cash and back again to RMB.”
While China’s capital controls “may not be eased in the initial stages of digital RMB introduction into Macau,” the analysts predicted, “in the longer term, with the transparency and traceable nature of digital RMB transactions, we see potential capital restriction relaxation as a governmental objective aimed at promoting cross-border RMB usage.”
Digital currency would protect against money laundering and provide an easier, safer gaming experience, and because all transactions would be on record, it would enable China to relax its grip on cross-border capital controls.
But there’s a potential downside, according to Bernstein, in that trackable transactions could cause high rollers to shy away for fear of being “under surveillance.”
That aside, the benefits outweigh the drawbacks, the team believes. “A more transparent environment may lead to government loosening the restrictive measures and encouraging more mass play in Maca
“The clearance of illegal money movement in the gaming industry will ultimately benefit the operators in the long run.”
