China’s central bank aims to transform the e-CNY into an interest-bearing deposit currency starting in 2026.
The People’s Bank of China (PBOC) has announced that banks will be allowed to pay interest on customers’ digital yuan deposits. The reform will take effect on January 1, 2026.
In an article published in the state-run newspaper Financial News, Lu Lei, deputy governor of the PBOC, explained that the digital yuan will undergo a substantial functional transformation. The e-CNY will move away from its current role as electronic cash and take on the characteristics of a true “digital deposit currency,” the deputy governor said.
This evolution follows a decade of pilot programs and field testing. Despite the digital yuan being regarded as one of the most technologically advanced CBDCs globally, and with official testing having begun in 2019, Beijing has faced significant challenges in persuading citizens to adopt the payment instrument on a large scale.
With the implementation of the new regulatory framework, banks will be able to remunerate verified digital wallets in line with existing self-regulatory agreements used to set interest rates on traditional deposits. An important aspect of the reform concerns consumer protection: digital yuan balances will benefit from the same safeguards provided to conventional bank deposits through the national deposit insurance system.
The reform also grants banks greater operational flexibility, allowing them to manage digital currency balances within their asset–liability management activities. As for non-bank payment firms, Lu clarified that mandatory reserves held in digital yuan will follow the same rules applied to customer reserve funds, maintaining a 100% reserve ratio.
As of November 2025, usage figures for the e-CNY showed 3.48 billion transactions processed, with a total value of 16.7 trillion yuan, equivalent to approximately $2.38 trillion.
Expansion strategy
The announcement comes amid intensified efforts by China to promote the e-CNY. The national digital currency has struggled to gain market share, primarily due to competition from well-established mobile payment platforms such as WeChat Pay and Alipay.
In the week preceding the announcement, the central bank stated its intention to expand the cross-border use of the digital yuan. According to the South China Morning Post, pilot projects are planned with Singapore, alongside initiatives to promote CBDC payments with trading partners including Thailand, Hong Kong, the United Arab Emirates, and Saudi Arabia.
In September, the PBOC opened the International Operations Center for the e-CNY in Shanghai, an initiative aimed at increasing the global influence of China’s currency within international financial networks.
