The local currency, historically issued against the Hong Kong Dollar (HKD) currency might stop being so, the president of the Second Standing Committee of the Legislative Assembly (AL), Chan Chak Mo, said yesterday in a media briefing after a committee meeting to analyze in detail the new Currency Establishment and Issuance Legal System.
Chan noted the bill is relatively simple and consensual noting only that there are some omissions in what concerns the reserve fund that backs up the currency issuance, as well as the use of HKD currency in Macau, raising questions from the committee members that will be sent to the government.
“In Article 6, in what concerns the ‘monetary issuance coverage’ it is said that the issuance of patacas is covered through a reserve fund. This is practically the same norm as the previous law [7/95/M], there is no big difference, just the wording used. But it does not state what is the currency of the reserve fund,” Chan said.
He explained, “Currently we use reserve fund in HKD which means that for each MOP issued we need to have one HKD in the reserve. On the new bill, we don’t have this reference to HKD, so we are asking the government what is the legal intention in leaving this matter ‘open’? Is it to potentially stop the issuance against the HKD and do it maybe against the RMB? We don’t know exactly. That’s why we are asking.”
The committee president further noted reference to the HKD is also lacking in other articles and parts of the bill, a fact that raised some questions from the lawmakers.
“It is mentioned that the only currency in circulation is the pataca, so this raised doubts about whether payments are or are not accepted in HKD, as we know that traditionally the two currencies have been circulating together and are widely accepted for transactions in Macau,” Chan said.
He added, “We think that the intention from the government is not to stop the use or to turn illegal the payments or transactions in HKD, but it is not clear, so we are also asking this.”
As for other parts, Chan noted the bill as a legal regime is relatively simple and broad with the specifics to be regulated through several administrative regulations, which are beyond the scrutiny of the AL. He said it is expected the discussion over this law will be brief and fast, with the law potentially to be sent to the plenary for final voting and approval very soon, he said.
As previously mentioned, the new legal regime allows money issuers to continue to issue banknotes and gives them broader scope by allowing the money issuing banks (Bank of China and BNU) to also issue coins, a task that until now was only done by the Monetary Authority of Macao.
Among the new privileges established by this new law for money issuers is also the possibility of the issuance of digital currency.
