Pataca may be set to become a ‘symbolic currency’

Secretary for Economy and Finances Lionel Leong’s statement of intention on Monday to lift restrictions to the use of the yuan in Macau has been interpreted by local economists as a way to diminish the relevance of the local currency, which is set to become a “symbolic currency.”
Lionel Leong said that the government wants to cancel “the preliminary restrictions regarding the use of yuan, in order to support [Chinese] financial institutions in their expansion abroad.”
Economist Albano Martins interpreted the secretary’s statement as a way to show support for “the free circulation of the yuan in Macau.” Besides the local currency, in Macau, the Hong Kong Dollar is used widely and is the currency used to gamble. Some shops also accept the Chinese currency in a way that many deem to be unlawful, considering that there are establishments that equate the pataca with the yuan (even though the yuan is worth 30 percent more).
“If the yuan is used to buy things in Macau, similar to the pataca, it becomes a local currency,” Albano Martins says. He indicates that the measure could have unpredictable consequences, since it could lead “to a lack of control over the money supply.” However, unrestricted use of the yuan could also create more business opportunities, since there is no need to convert money.
Martins sees the tendency highlighted by the secretary as inevitable: “Sooner or later, the yuan will knock down the pataca, and the latter will stop being a high-circulation currency. The pataca will end with [regional] integration.”
José Sales Marques holds a similar view, stating that the government is favoring a higher use of the yuan in Macau. This is a policy that, according to the president of the Institute for European Studies of Macau, “makes complete sense,” since “even the locals ponder converting their savings to Chinese currency.”
“Yuan is a currency that is becoming internationalized, and many countries do business using the Chinese currency and not the dollar,” he said, adding that the pataca “will increasingly become a symbolic currency.”
Meanwhile, the Macanese economist stresses the need to regulate the use of the yuan: “In shops, we see small letter warnings mentioning that the exchange rate is one-to-one. This is exploitation, and it needs to be regulated,” Mr Sales Marques concluded. MDT/Lusa