CHINA: Macau government to revise financial system and add digital currency legal framework in 2022.

As published on macaubusiness.com, Wednesday 17 November, 2021.

The Macau SAR government will advance with proposals to reformulate the local financial system legal framework in 2022, cancel the system of review and approval of the issuance of bonds in force, introduce investment bank licenses, and improve changes that would allow for digital currencies, the policy address document for next year reveals.

The Macau SAR administration policy guidelines for 2022 were revealed yesterday (Wednesday) by Chief Executive Ho Iat Seng with the document including several details on government goals to advance the local financial sector, one of the proposed areas set to help diversify the SAR’s economy away from gaming.

In order to advance with the ‘pragmatic’ advancement of the local modern financial sector authorities will accelerate the development of the city’s bonds market, financial management, and financial leasing activities, promote the construction of a Renminbi settlement center cross-border and strengthen ‘green finance’ activities, the document indicates.

In 2022, the main plan of government action lines in the area of Economy and Finance is centered in four areas: ‘prudent and healthy management of public finances and post-epidemic economic revitalization; adequate diversification of the economy; construction of the ‘One Center, One Platform; and integration in the context of national development’.

The document indicates authorities have plans next year to propose changes to the law enforcement in 1995 that define the monetary issuance system in SAR so as to ‘specifically regulate’ digital currencies and electronic payments, and upgrade the Financial System Act of Macau which defines the legal framework to be applied to the financial activity in the SAR, and first enforced in 1993.

‘Taking into account that some of the requirements or contents of supervision provided for in the Legal Framework of the Financial System are not consistent with the real needs, there is a need to review the respective regime, so that the legal regime of local financial supervision, in addition to promoting the development of the financial market, meets the requirements of international supervision,’ the document indicates.

This year Chief Executive Ho Iat Seng also announced that local monetary authorities would be evaluating the possibility of advancing legislation that could allow for a centralized digital yuan to be used in the SAR.

The proposed review and changes to the local legal framework of the local financial system and monetary regulations are expected to be completed in the last quarter of 2022.

Concerning the establishment of a local bonds market work will be carried out to create a ‘System of central securities custody’ which will link local financial institutions and other infrastructure existing financial instruments.

In order to articulate the functioning and the development of the secondary market,’ ‘Regulations to the issue, registration, custody, and settlement of bonds’ and ‘Applicable Regulations for participants on trading platforms’ will also be pushed forward.

‘Work will also advance relating to the “International Securities Identification Number”, in order to attract more institutions with high quality to issue bonds in Macau, with studies on complementary measures for issuing bonds also carried out,’ the document adds.

The document also addresses the development of the wealth management sector, with legislative work for a ‘Fiduciary Law’ to be advanced, as well as the improvement of inherent legislation through an interdepartmental working group.

‘Through the implementation of the pilot Wealth Management Cross-Border Finance in the Greater Bay of Guangdong-Hong Kong-Macao, financial institutions will be encouraged to explore more qualified financial products for the access to the pilot project,’ the document adds.

The scheme was officially launched by Beijing a month ago and allows Hong Kong and Macau residents to invest in onshore Chinese investment products through banks in the Greater Bay Area, while residents of nine cities in Guangdong province can invest in Hong Kong and Macau wealth products through local lenders.

Around 4,000 residents of Mainland China and Macau have opened accounts via the Wealth Management Connect scheme for the Greater Bay Area, with around 900 transactions registered, the Monetary Authority of Macau (AMCM) revealed.

Funding for green finance projects will also be promoted via the Macau MOX bonds platform in order to foster product development and Macau Green Finance Services, with conferences on the topic to be organised and more training of qualified staff in this area to be provided.

In order to better promote the development of activities of financial leasing, the AMCM will also maintain close cooperation with sector associations in Mainland China, continuing to promote local banks to support the search for funds from the leasing sector, providing direct and indirect means of financing for the development of financial leasing activities.

The establishment of a Financial Infrastructure Data Center is also on the cards, with the first system tests to be carried out in the first half of 2022, and its operational start already next year.

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