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China to make e-CNY interest-bearing from Jan. 1, 2026
The People’s Bank of China (PBOC) has announced a major policy shift: starting January 1, 2026, verified digital yuan wallets will be eligible to earn interest. The move formally transforms the e-CNY from a cash-like retail payment instrument into a regulated digital deposit currency backed by national deposit insurance.
What the new framework changes for users and banks
Under the updated rules outlined by PBOC deputy governor Lu Lei, commercial banks will be authorized to pay interest on customers’ digital yuan balances using existing rate-setting frameworks similar to those for traditional deposits. Digital yuan holdings in verified wallets will receive the same protections as conventional bank deposits through China’s deposit insurance system, reducing counterparty risk for consumers and strengthening trust in the central bank digital currency (CBDC).
Operational implications for banks and non-bank payment firms
The reform grants banks greater flexibility in asset-liability management of e-CNY balances, enabling them to integrate digital deposit liabilities into broader liquidity and capital planning. By contrast, non-bank payment providers will face stricter reserve requirements: they must hold 100% reserves in digital yuan for funds that belong to customers, mirroring current rules applied to customer reserve funds. This preserves stability in the payment layer while allowing licensed banks to intermediate interest-bearing e-CNY deposits.
Adoption challenges and current usage metrics
Despite early showcases beginning in 2019 and wide recognition of the e-CNY’s technological sophistication, adoption among everyday users has been slower than Beijing expected, partly due to entrenched mobile payment ecosystems like WeChat Pay and Alipay. According to official PBOC figures, the e-CNY processed around 3.48 billion transactions through November 2025 — an indicator of meaningful activity but still far from displacing incumbent payment rails.
Why interest-bearing status matters for CBDC strategy
Converting e-CNY into an interest-bearing digital deposit is a strategic step to increase usage by offering a financial incentive to hold central bank money in digital form. Interest on e-CNY could make the CBDC more attractive as a store of value and payment medium, while deposit insurance addresses safety concerns that may have deterred potential users.
Cross-border ambitions and international pilots
The PBOC also signaled plans to expand cross-border pilots to extend the digital yuan’s reach beyond domestic retail payments. Pilot projects are slated with Singapore, and additional collaborations are planned with Thailand, Hong Kong, the United Arab Emirates, and Saudi Arabia. In September, the PBOC launched an International Operations Center for the e-CNY in Shanghai to help scale the currency’s global interoperability and settlement capabilities.
Market outlook and competitive landscape
The initiative strengthens China’s CBDC roadmap and could accelerate global CBDC experimentation by providing a practical example of interest-bearing central bank money. Observers will watch how banks price e-CNY deposits, how non-bank platforms comply with 100% reserve rules, and whether the new framework boosts retail adoption versus dominant mobile payment players.
For crypto and blockchain audiences, the change is notable: it blurs lines between traditional deposit banking and programmable central bank money, while reinforcing the regulatory framework around digital currencies. Expect follow-on guidance from the PBOC and monetary authorities as pilots expand and banks operationalize interest-bearing e-CNY services.
Source: crypto
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