Ping An View:
The central bank’s digital currency is booming, and China’s digital RMB development leads the world’s major economies. Digital currency includes non legal cryptocurrency and legal digital currency. Compared with traditional physical currency, digital currency has the characteristics of non forgery, point-to-point fast transaction and convenient flow. As Libra challenges the sovereign currencies of countries, countries will accelerate the exploration of legal digital currency after 2019. China’s pilot exploration of the central bank’s digital currency is at the forefront of the world’s major economies. Digital RMB (ecny) is a legal tender in digital form issued by the people’s Bank of China. It has the characteristics of payment and settlement, controllable anonymity and so on. Digital RMB can significantly reduce the issuance and exchange costs of traditional legal tender, has higher payment and clearing efficiency, and is conducive to the internationalization of RMB.
The recent pilot acceleration of China’s digital RMB still has great room to improve its penetration. At present, digital RMB is piloted in “10 + 1” regions or scenarios. The governments of 10 pilot regions actively promote the application of digital RMB in C-end and b-end through preferential incentives; The Winter Olympics has provided a unique scenario for the cross-border application of RMB to Beijing. By the end of 2021, 261 million personal digital RMB wallets had been opened, with a transaction amount of 87.6 billion yuan, an increase of 11.5 times and 154% respectively compared with the end of June 2021, but there is still great room for improvement compared with the transaction amount of one million billion yuan per quarter of mobile payment. At the beginning of 2022, the digital RMB (pilot version) app was officially launched in major mobile app stores, and the popularity of digital RMB may continue to improve.
Breaking the monopoly of third-party payment, Jingdong, meituan and other companies actively embrace digital RMB. Digital RMB adopts a two-tier operation mode. Under the premise of central bank centralized management, commercial banks and relevant institutions jointly promote the pilot application. Jingdong, meituan and other companies are leading the Internet industry in the application of digital RMB, mainly due to strong promotion willingness, rich consumption scenarios and large preferential incentives. By the end of 2021, more than 1 million users had used digital RMB in jd.com, with a cumulative consumption of more than 200 million yuan. In terms of consumption scenarios, jd.com and meituan have rich e-commerce and local life application scenarios. In terms of preferential incentives, in addition to the traditional discount coupons, JD became the first company to use digital RMB to pay salaries, and meituan launched digital RMB low-carbon cycling activities. Compared with Jingdong and the US group, WeChat and Alipay were relatively slow to participate in the trial. They did not use a large number of incentives to encourage consumers to use digital Renminbi.
Investment suggestion: grasp the investment opportunity of digital RMB from two aspects of hardware equipment and software system. At present, the digital RMB is in the initial stage of development, and opportunities and challenges are growing. Hardware manufacturers may benefit from the market opportunities brought by the digital RMB “Hard Wallet”. A major feature of digital RMB is that it supports payment by hardware such as mobile NFC, bracelet and wearable devices. With the improvement of the acceptance of relevant “hard wallets”, relevant digital RMB hardware developers will have the opportunity to obtain more relevant orders and promote the improvement of performance. Software manufacturers may benefit from the business growth brought by the upgrading of the financial system. With the popularity of digital RMB, relevant financial institutions need to upgrade the matching of relevant software systems, or will bring huge demand for system upgrading for relevant software manufacturers. It is suggested to pay attention to Yusys Technologies Co.Ltd(300674) , Shenzhen Sunline Tech Co.Ltd(300348) .
Risk tips: 1) the epidemic has caused the macro-economy to be less than expected; 2) Payment habits are difficult to change, and the promotion of digital RMB is less than the expected risk; 3) Risk of immaturity of underlying technologies related to digital currency.
