Digital yuan shifts to interest-bearing deposits from Jan. 1, 2026

China will let banks pay interest on digital yuan wallets from Jan. 1, 2026, turning e‑CNY into a digital deposit currency and expanding cross‑border pilots.
Summary

• PBOC will let banks pay interest on verified digital yuan wallets, shifting e‑CNY from “digital cash” to a deposit currency with full deposit insurance coverage.
• Non-bank payment firms must hold 100% reserves in digital yuan, while banks gain more flexibility to manage e‑CNY in asset‑liability operations.
• China plans new cross‑border pilots with Singapore, Thailand, Hong Kong, UAE and Saudi Arabia to extend digital yuan use beyond domestic retail payments.

China’s central bank announced plans to transform the digital yuan into an interest-bearing deposit currency beginning January 1, 2026, according to a statement from the People’s Bank of China.

China exploring digital yuan

Banks will be permitted to pay interest on customers’ digital yuan deposits under the new regulatory framework, the PBOC stated. Lu Lei, deputy governor of the central bank, outlined the changes in an article published in Financial News, a state-run newspaper.

The digital yuan will transition from its current function as electronic cash to become a “digital deposit currency,” Lu stated. The evolution follows a decade of pilot programs and field testing, according to the central bank.

Beijing has encountered challenges in driving widespread adoption of the payment instrument among citizens, despite official testing having commenced in 2019. The digital yuan has been characterized as one of the most technologically advanced central bank digital currencies globally, according to industry observers.

Under the new framework, banks will be authorized to remunerate verified digital wallets according to existing self-regulatory agreements used for setting interest rates on traditional deposits. Digital yuan balances will receive the same protections as conventional bank deposits through the national deposit insurance system, the PBOC stated.

The reform provides banks with greater operational flexibility to manage digital currency balances within their asset-liability management activities, according to the announcement. Non-bank payment firms will be required to maintain mandatory reserves held in digital yuan at a 100% reserve ratio, following the same rules applied to customer reserve funds, Lu stated.

As of November 2025, the e-CNY recorded 3.48 billion transactions processed, according to official figures.

The announcement follows intensified efforts by Chinese authorities to promote the digital currency, which has faced competition from established mobile payment platforms including WeChat Pay and Alipay for market share.

The central bank stated its intention to expand cross-border use of the digital yuan in the week preceding the announcement. Pilot projects are planned with Singapore, along with initiatives to promote central bank digital currency payments with trading partners including Thailand, Hong Kong, the United Arab Emirates, and Saudi Arabia, according to the South China Morning Post.

In September, the PBOC opened the International Operations Center for the e-CNY in Shanghai, an initiative designed to increase the global influence of China’s currency within international financial networks, the bank stated.