The local government says that the ongoing research and development of its digital pataca issuance, including trial operations, is being carried out in three phases before it can be officially launched.
The government also underlines that the future digital patacas will also be Macau’s legal tender, the same as physical money, with zero credit risks.
The government also says that the future first-phase trial issuance and operation of digital patacas will be carried out by the Bank of China (BOC) Macau Branch, one of the city’s two note-issuing banks, alongside Portugal’s BNU.
Macau Monetary Authority (AMCM) President Benjamin Chan Sau San made the remarks in an interview with public broadcaster TDM on Tuesday, which came after Chief Executive Ho Iat Seng said on Monday that the government was planning to carry out a public demonstration of the prototype of the digital pataca development project at the end of this year. Ho made the remarks during Monday’s opening ceremony of the 2nd China-Portuguese-speaking Countries Central Banks and Financiers Conference in Cotai.
The BOC Macau Branch told TDM on Tuesday that its trial operation of digital patacas was expected to start at the end of next year.
Ho said on Monday that the Macau Monetary Authority is carrying out the research and development of the digital pataca issuance in collaboration with the People’s Bank of China’s (PBOC) Digital Currency Institute.
Last year, Macau enacted a new law regulating its money issuance, which took effect on September 1, according to which Macau’s legal tender encompasses digital currency alongside the traditional forms of currency, namely banknotes and coins, granting digital currency the same legal status as physical money.
The pataca is Macau’s sole legal tender.
A follow-up AMCM statement on Monday noted that unlike common cryptocurrencies developed by the private sector, the digital pataca, aka e-Mop, is legal tender in a digital form.
The statement underlined that digital patacas have the same legal status as banknotes and coins, with zero credit risks.
The statement said that the Macau Monetary Authority is aiming to complete the setting-up of the prototype of its digital pataca development project at the end of this year, enabling the government to display the future digital patacas’ functions and applications to members of the public.
The statement also said that the Macau Monetary Authority will carry out tests on the prototype in a controlled environment, aka sandbox testing, with the aim of exploring the scenarios where digital patacas can be used.
Sandbox testing refers to a controlled environment where software applications can be tested in isolation from the rest of the system.
How 3 phases will be carried out
Speaking to TDM on Tuesday, Chan said that the local government’s research and development of its digital pataca issuance is being carried out in three phases. According to Chan, the first phase is the ongoing development of a core system for the digital pataca issuance, including defining its functional scope and designing its user interface, with its prototype’s public demonstration scheduled for this December.
According to TDM, Chan said that the second phase is to carry out the e-Mop development project’s internal trial operation where tests will be conducted on its prototype in a controlled environment, aka sandbox tests, under a whitelist comprising certain entities and users to be selected to take part in the tests.
In the second phase, Chan said, the controlled-environment tests are expected to gradually cover different retail payments as well as payments in other scenarios.
Chan also said that the first-phase e-Mop trial operation will be carried out by the BOC Macau Branch.
Chan said that based on the results obtained from the controlled-environment tests, the government will then draft legislation regulating the e-Mop issuance and its respective regulations as well as drawing up the respective regulatory guidelines.
According to Macau’s new money issuance law enacted last year, the government’s e-Mop issuance is to be regulated by specific pieces of legislation.
According to Chan, the second phase will also include the possible addition of other financial institutions to the e-Mop operation.
According to TDM, Chan said that the third phase is to launch comprehensive public tests in compliance with the future completed enactment of the necessary legislation as well as its respective regulations and guidelines, when the e-Mop system will be fully developed, with the aim of enabling digital patacas to be gradually applied in various payment scenarios for members of the general public.
Chan also said that in the third phase, the government will also launch a project to develop wholesale digital patacas, i.e., the one used for interbank settlements.
The e-Mop to be used by consumers and businesses is known as retail digital patacas.
How e-Mop & mobile payments differ
According to TDM, Chan also pointed out that as e-Mops will also be Macau’s legal tender, the government must prevent the occurrence of any incidents that jeopardise the e-Mop system’s stability. Consequently, Chan said, the government will only fully get its digital pataca issuance off the ground after ensuring the system’s complete security, reliability and stability.
According to TDM, Chan also noted that the e-Mop and the various mobile payment apps are two different types of payments. Chan noted that after completing their transactions with customers via mobile payment platforms, businesses are still required to settle transactions with banks or other financial institutions before they finally receive the money.
Chan said that when using e-Mops, the settlements are immediately done when the transactions are carried out, identical to the scenario when cash is used, because of which the e-Mop will be a payment with zero credit risks.
Moreover, Chan also said that the government plans to roll out the e-Mop in two forms, where the physical wallet will be a card to be used by those without a smartphone such as some senior citizens and children, while the e-wallet will also be a mobile payment app similar to the various current mobile payment tools.
Meanwhile, the BOC Macau Branch told TDM on Tuesday that it is part of the government’s whitelist for the e-Mop trial operation, which is expected to start at the end of next year.
Macau Monetary Authority (AMCM) President Benjamin Chan Sau San talks during Tuesday’s interview with public broadcaster TDM. – Photo courtesy of TDM
