Macau is a peculiar region located in China. One thing that underlines it is the fact that it maintains a sovereign governing and economic systems that differ from those of Mainland China. It is no coincidence that it acquired the official name of Macao Special Administrative Region of China. The area operates under an administrative system, best defined as “One Country, Two Systems.” Similar to Hong Kong, Macao is a SAR (special administrative region) of China and has full autonomy over its governance and economic pursuits.
The area, located at the delta where The Pearl River flows into the South China Sea, was formerly a Portuguese colony but became a SAR of China in 1999. Macau boasts its special local currency, which appears to have a significant impact in global financial markets, like the Hong Kong dollar. This article will enlighten you about Macau’s money, its history, and how it has shaped the region’s economy.
What is Macau Money?
The currency in Macau is called the Macanese Pataca and is represented by a special dollar symbol, MOP$. Macau is a special economic territory because while the Pataca, Hong Kong Dollar, and China Yuan can be locally used during various transaction, the Macau Pataca holds no exchangeable value in international financial markets. Unlike most currencies, MOP is not regulated by a central bank, but by two financial institutions: The Bank of China and Banco Nacional Ultramarino. The etymological meaning of the word was coined from an Old Portuguese expression, “alvore das patacas,” which means the tree of wealth.
A Look into the Peculiar History of the Macau Pataca
For more than three centuries, daily transactions and other payment gateways were done using silver. The metallic coin was valuable, and many people preferred using them. However, there were several other silver currencies of different values at the time, making it challenging to calculate the real value of the available currencies.
The Macanese Pataca was introduced in the territory’s financial sector in 1894 when they overwhelmed the Portuguese Escudo at a rate of 450 in exchange for 1. A single Pataca is subdivided into 100 units known as “avos.” Macanese were at first reluctant to adopt the new Macau money. They were even compelled to trade their wages in exchange for other silver coins in foreign economies.
In 1902, the Portuguese Government began making plans to make Patacas an official currency. Banco Nacional Ultramarinos decided to establish a branch in Avenida de Almeida Ribeiro, to add to its list of financial institutions that the government in Portugal had founded in other colonies such as India and Africa. BNU became the sole financial institution in Macau, with the full power and mandate to issue Patacas vested on it.
The value of the Macau Pataca had risen significantly. By 1935, the BNU had already released several denominations of the banknotes, including 1, 5, 50, and 100. It also marked the year in which the currency was first listed in the foreign exchange index to the Portuguese Escudo.
During the latter years of WWII, financial markets underwent severe crises, which compelled financial institutions to find innovative ways to manage people’s money. Notably, BNU – based in Lisbon – was hardly hit by the war. It then commissioned a money printing company in London to handle the production of banknotes. Continued economic depression paralyzed the financial market, forcing BNU to use account certificates to manage funds. The war also led to an influx of refugees in Macau, which sent the financial industry to its “knees.” Financial institutions refused to accept 5 and 10 Pataca notes. What followed was the banning of other foreign account certificates and the mandatory use of Pataca notes. In 1952, BNU decided to produce coins that could replace Pataca notes that were below MOP$ 10.
In 1980, the local government established the Monetary Institute of Macau (IEM) to undertake monetary regulations and issue Pataca notes as per BNU’s guidelines. It later was designated as the Monetary and Foreign Exchange Authority of Macau (AMCM), which was also changed to the Monetary Authority of Macau once the territory was transferred to the People’s Republic of China. Eight years later, BNU released the first 1000 Pataca notes, which remains the most valuable note in the region to date.
By 1996, the Bank of China acquired the rights to issue Pataca notes of all denominations, including 20 Pataca banknotes that were not available until 1995.
Widespread Usage of Macanese Pataca
The Macau Pataca started slow in becoming the standard local currency due to several challenges. The Macau economy depends mainly on its gambling and tourism sector. Most visitors in Macau come from mainland China and carry the Hong Kong Dollar and China Yuan. That has forced many traders (taxi operators, retailers, and service establishments) to accept these foreign currencies while Pataca is barely accepted beyond Macau’s borders. It somewhat creates a win-win situation because Macau gets to expand its foreign investments and revenue while a SAR of China, like Hong Kong, popularizes its dollar.