Digital Yuan to Offer Interest-Bearing Deposits Starting January 1, 2026

China makes digital yuan interest-bearing deposit money

China's central bank has announced it will allow banks to pay interest on digital yuan wallets starting January 1, 2026. This will mark a significant transition of the e-CNY into a digital deposit currency and facilitate the expansion of cross-border pilots.

Overview of the Digital Yuan's Evolution

According to a statement from the People's Bank of China (PBOC), banks will now be able to pay interest on customers' digital yuan deposits, as explained by Lu Lei, the central bank's deputy governor, in an article released by Financial News, a government-affiliated newspaper. The digital yuan will evolve from its current role as electronic cash to become recognized as a "digital deposit currency."

This development comes after nearly ten years of pilot programs and extensive field testing. Despite the initiation of official testing in 2019, China has faced hurdles in encouraging widespread usage of the digital payment method among its citizens. Industry experts note that the digital yuan is widely regarded as one of the most sophisticated central bank digital currencies worldwide.

Under this new framework, banks can provide interest to verified digital wallets based on self-regulatory frameworks that govern interest rates for conventional deposits. The PBOC assures that digital yuan balances will be granted the same protection as traditional bank deposits through the national deposit insurance system.

This reform is said to offer banks greater flexibility in managing digital currency balances in their asset-liability management strategies. Additionally, non-bank payment services must maintain mandatory reserves in digital yuan at a 100% ratio, following the same rules that apply to customer reserve funds.

As of November 2025, there have been 3.48 billion transactions recorded with the e-CNY, according to official statistics.

Competitive Landscape and Global Expansion

The recent announcement follows renewed efforts by Chinese officials to promote the digital currency, which is competing with established mobile payment platforms, such as WeChat Pay and Alipay, for market dominance.

Prior to this announcement, the central bank expressed its commitment to enhancing the cross-border utilization of the digital yuan. Pilot projects are planned with countries like Singapore, as well as initiatives to bolster central bank digital currency transactions with trading partners such as Thailand, Hong Kong, the United Arab Emirates, and Saudi Arabia.

Furthermore, in September, the PBOC inaugurated the International Operations Center for the e-CNY in Shanghai, designed to amplify the global impact of China's currency within international financial systems.

Key Takeaways:

As of January 1, 2026, banks in China will be able to pay interest on digital yuan wallets.
The digital yuan is transitioning from electronic cash to a digital deposit currency.
This change aims to enhance the digital currency's adoption and competitiveness against established payment services.
The PBOC is planning to expand the digital yuan's use internationally through various pilot projects.