Event: the people’s daily (edition 01, March 30, 2022) reported that Mu Changchun, director of the digital currency Research Institute of the people’s Bank of China, was invited to make a report entitled “Application of digital currency” in the collective study of the 70th chairman meeting of the 13th National Committee of the CPPCC, which was the first collective study of the chairman meeting in 2022. Wang Yang, member of the Standing Committee of the Political Bureau of the CPC Central Committee and chairman of the National Committee of the Chinese people’s Political Consultative Conference, presided over and made a speech at the chairman’s meeting.
The central government strongly supports the research and development of digital RMB, which is of great importance. In addition to the collective learning of the CPPCC, in October 2020, the general office of the CPC Central Committee and the general office of the State Council expressed their support for the R & D and application of digital RMB for the first time. In the pilot implementation plan for comprehensive reform of building a leading demonstration area of socialism with Chinese characteristics in Shenzhen (20202025), they proposed to “support the internal closed pilot test of digital RMB and promote the R & D, application and international cooperation of digital RMB”. We believe that these measures reflect the full support of the central office, the State Council office and the CPPCC for the research and development of digital RMB, and inject a “booster” into the application of digital RMB.
The people’s Bank of China proposes to expand the pilot scope in an orderly manner and gradually establish and improve the management system framework. As the issuer of digital RMB, the people’s Bank of China (PBOC) has expressed its intention to promote the development of digital RMB in the video conference on currency, gold and silver and security for many years: 1) in 2020, the PBOC said that it would “steadily carry out the research and development of legal digital currency” and “unswervingly promote the research and development of legal digital currency”; 2) In 2021, the people’s Bank of China said “steadily / steadily promote the research and development of digital RMB”; 3) In 2022, the people’s Bank of China said that “we will steadily / solidly promote the digital RMB research and development pilot, orderly expand the pilot scope, continuously improve the design and use, and gradually establish and improve the management system framework”. We believe that the statement of the people’s Bank of China is becoming more and more specific and substantial, which will lay a long-term and solid institutional foundation for the implementation of digital RMB.
Rebuild a set of electronic payment system and reconstruct the industrial chain. We believe that the significance of digital RMB lies in the construction of a new electronic payment system, reflecting its large policy space. Specifically, this includes: 1. New account system: the digital RMB account system is different from the current account classification system of bank cards; 2, the new operation system: 1) the new operation organization / distribution organization: only six state-owned commercial banks, China Merchants Bank Co.Ltd(600036) , network business bank (Alipay) and micro public bank (WeChat payment) and other institutions; 2) New clearing institution: without the direct participation of UnionPay and online Federation, the clearing work is undertaken by the digital currency Research Institute of the central bank; 3) Charging policy for new merchants: currently free; 4) New consumer subsidy means: joint local governments, with the help of government funds, etc; 3. New software and hardware system: Hardware wallet. Different from some market views, the birth of digital RMB only comes from regulatory needs, and there is no market demand. We believe that based on some characteristics of digital RMB, it is expected to “take root” in China’s electronic payment system for a long time, reconstruct the interest chain of electronic payment, and reduce payment service fees for small and medium-sized merchants.
Investment suggestion: as of December 31, 2021, China’s digital RMB pilot scenarios have exceeded 8.0851 million, 261 million personal wallets have been opened, and the transaction amount is 87.565 billion yuan. We are optimistic about the opportunities that digital RMB may bring to relevant institutions by reconstructing China’s electronic payment industry chain. Suggestions: 1. Bank acquiring service providers: card transfer, Lakala Payment Co.Ltd(300773) , Newland Digital Technology Co.Ltd(000997) etc; 2. Financial IT / banking service providers: Sinodata Co.Ltd(002657) , Shenzhen Forms Syntron Information Co.Ltd(300468) , Northking Information Technology Co.Ltd(002987) , etc; 3. Security chip company: Unigroup Guoxin Microelectronics Co.Ltd(002049) , Huada electronics, etc; 4. Card dealer: Hengbao Co.Ltd(002104) , Chutian Dragon Co.Ltd(003040) , Wuhan Tianyu Information Industry Co.Ltd(300205) , etc.
Risk tip: the operation mode of digital RMB needs to be verified, and the promotion progress of digital RMB is less than expected.
