E-cny | Digital yuan expected to shore up GBA integration: Economist

The Greater Bay Area (GBA) may enter an era of more robust financial integration, should there be a common currency adopted in the region. The digital yuan may be the possible coinage, suggested Florence Lei, assistant professor of the Faculty of Business and Law at the University of Saint Joseph (USJ).
In yesterday’s seminar, titled “The Greater Bay Area Financial Integration: Towards a Single Market?” hosted by the France Macau Chamber of Commerce, Lei expounded her views to the audience on the status-quo of and outlook for GBA’s economy.
Lei suggested that whenever there is a change from traditional payments to digital payments, the velocity of money flow is faster, resulting in more transactions achieved at any given time.
It seems like the possible roll-out of digital yuan in Macau is inching closer to its launching — especially after Macau’s Chief Executive Ho Iat Seng declared on April 13 that the Macau SAR government and the People’s Bank of China (PBOC) have already began examining the feasibility of bringing digital yuan into this city.
The utilization of digital yuan, also known as digital RMB, Ho stressed, is targeted to more effectively combat money-related unlawful acts, such as money laundering, tax evasion and the financing of terrorism.
Ho proclaimed that the government has plans in place to amend relevant legislation to better regulate the issuance of digital legal tender.
When queried by the audience as to whether now is the right time to invest in the electronic payment-related business after seeing digital yuan is on the horizon, Lei suggested, “I would say wait a bit, since the experiment [of digital yuan] is still going on. But I would say there is a trend towards that.”
While some are concerned that patacas may give way to digital yuan after it has been implemented for some time, Lei clarified that digital yuan — to be exact — is more of a form of payment, and that habitual elements in the way people undertake the transaction would be the most important consideration.
She said that the digital yuan is unlikely to cause inflation. “From an economic perspective, money is liquidity. Digital currency is still creating liquidity. We’re not creating wealth. We are talking about the form of payment,” she explained.
The most likely negative impact of digital RMB in Macau will be on the city’s junket business. Some casino experts speculated that the traceable digital currency would heavily slacken the local junket sector, which has been reeling from economic fallout from the Covid-19 pandemic and China’s more intense suppression of overseas gambling.
Whilst the timeframe of digital RMB being ushered into Macau remains unclear, the Digital Currency Electronic Payment (DCEP) scheme, which has been implemented by the Chinese government since 2019, is now in full swing.
By October 2020, digital yuan trials will be extended to six more places, namely Shanghai, Hainan province, Changsha of Hunan province, Xi’an of Shaanxi province, Qingdao of Shandong province and Dalian of Liaoning province.
Besides, the PBOC’s digital currency research institute and the Hong Kong Monetary Authority have already begun the technical testing of digital RMB in Hong Kong, Wang Xin, head of the PBOC’s research bureau, confirmed earlier this month.