Macau - Monetary System

Monetary System

In Macau, the unit of currency is the pataca which is currently pegged to the Hong Kong dollar at a rate of HK$1 = MOP1.03. The name pataca is a Portuguese word which was applied to the Mexican dollars that were the main circulating coin in the wider region in the second half of the 19th century. In the year 1894, the pataca was introduced in both Macau and Portuguese Timor as a unit of account for the Mexican dollar and the other silver dollar coins in circulation. In 1901 it was decided to grant the Banco Nacional Ultramarino the exclusive rights to issue banknotes denominated in patacas, and in the year 1906, these notes went into circulation at an official equivalent rate of 2 shillings and 4 pence sterling, and all foreign coins were outlawed. However, the Chinese were suspicious of these paper patacas, being so accustomed to using silver for barter, and as such, the paper patacas circulated at a discount in relation to the silver dollar coins. In the year 1935, when China and Hong Kong abandoned the silver standard, the Hong Kong dollar was pegged to sterling at the fixed rate of 1 shilling and 3 pence, whereas the pataca was pegged to the Portuguese escudo at a sterling equivalent rate of only 1 shilling. From 1945 to 1951 fractional coins of the pataca were minted for issue in Portuguese Timor, and in 1952 similar issues were minted for Macau including an actual pataca coin for the first time.