China’s PBOC Unveils Action Plan to Enhance Digital Yuan by January 2026

The People's Bank of China (PBOC) has announced an "Action Plan" aimed at improving the management and financial infrastructure of the digital yuan.

Key Takeaways

Launch Date: The new digital yuan framework will commence on January 1, 2026.
Main Features: The updated digital yuan will serve as a monetary value measure, store of value, and enable cross-border payments.
Interest Incentives: Banks will offer interest on digital yuan wallet balances as part of the incentive structure.
Digital RMB Management Committee: A new committee will oversee the management and operational responsibilities related to the digital yuan.
Challenges Ahead: Adoption challenges persist due to previous setbacks and competition from established payment systems.

Digital yuan

The new framework for this central bank digital currency (CBDC), along with its management and operational mechanisms, is set to officially launch on January 1, 2026, according to reports from a Chinese business daily.

Lu Lei, the Deputy Governor of the PBOC, highlighted the key features of the updated digital yuan, emphasizing its issuance and circulation within the financial system. He also mentioned that the central bank will provide the necessary technical support and oversight.

The digital yuan will function as a measure of monetary value, a store of value, and a means for cross-border payments, he noted. This focus on the CBDC follows a decade of development and testing.

“In 2016, China introduced a two-tier operating system for the digital yuan. After ten years of practical testing, it has earned significant recognition from central banks and international organizations around the globe, establishing itself as a universal standard for digital currencies and a vital component for ensuring internal circulation of the monetary system and maintaining financial stability,” he explained.

Interest Payments on Crypto Balances

Lu Lei further introduced a "two-tier architecture" as part of the action plan, clarifying that banking institutions with digital yuan wallets will provide interest to customers based on their digital asset holdings.

“This setup creates a compatible incentive structure,” he stated, adding that banks can independently oversee the assets and liabilities associated with their digital yuan wallet balances.

This initiative comes months after China established a new digital yuan operations center in Shanghai, the country’s financial hub. The center will concentrate on three major platforms: a cross-border payment system, blockchain services, and a cryptocurrency platform.

At the administration level, the action plan revealed that the PBOC will form a Digital RMB Management Committee to coordinate various business lines and supervise responsibilities.

Resurgence of China’s Digital Yuan Following Challenges

China has faced obstacles, particularly after its multilateral cross-border payment platform, known as mBridge, came under scrutiny for potential shutdown talks. A year ago, the Bank for International Settlements (BIS) withdrew from the initiative, citing concerns that the underlying technology could be misused to bypass sanctions, jeopardizing the dollar's dominance in the global financial landscape.

Moreover, despite an ambitious rollout of the CBDC in 2019, user hesitancy and competition from well-established mobile payment systems have hindered its advancement.

Charles Chang, the director of the Fintech Research Centre at Fudan University, noted that “the digital yuan is encountering some significant hurdles in gaining traction today.”