Starting January 1, 2026, China will introduce interest payments on the balances of the digital yuan (e-CNY), making it the first in the world to implement such a practice. Holders of this currency will be able to earn income comparable to interest on traditional deposits.
The People's Bank of China (PBOC) officially presented a new management system for the digital yuan. Lu Lei, the deputy governor of the PBOC, shared details in an article published in the state newspaper Financial News. He noted that the digital yuan is transitioning to a "digital deposit currency" model, as opposed to its previous status as "digital money."
Contradiction to International Standards
This move contradicts international agreements stating that central bank digital currencies (CBDCs) should remain interest-free. Leading financial institutions, such as the European Central Bank and the Federal Reserve System of the USA, express concerns that interest accrual could threaten financial stability.
The new system is based on the "Action Plan for Improving the Management of the Digital Yuan and Financial Infrastructure." Interest will be accrued only on verified wallets in categories 1-3 for individuals and legal entities, while anonymous wallets in category 4 will not receive interest. Accruals will be made quarterly, on the 20th of the last month of each quarter, at rates similar to demand deposits.
Wang Jian, an analyst at Guoxin Securities, characterized this change as a transition from "digital money 1.0" to "deposit currency 2.0," emphasizing that it will create "a new type of bank account" that combines traditional payment methods with innovative contractual opportunities.
Impressive Figures
As of the end of November 2025, there were 3.48 billion transactions with the digital yuan in China, totaling 16.7 trillion yuan (approximately $2.37 trillion). The number of personal wallets reached 230 million, while corporate wallets numbered 18.84 million.
Additionally, the multi-currency bridge (mBridge) processed 4,047 cross-border payments totaling 387.2 billion yuan ($54.21 billion), of which 95.3% were transactions with the digital yuan.
Competition for Users
The introduction of interest is aimed at increasing the attractiveness of the digital yuan amid fierce competition with platforms like Alipay and WeChat Pay, which dominate the cashless payment market in China. Previously, the digital yuan was primarily used as a means of payment without a savings function.
The balance of the digital yuan will have the same protection as regular bank deposits through the national deposit insurance system. Commercial banks will be able to manage digital yuan balances within their assets and liabilities, providing them with greater operational flexibility.
In September 2025, the PBOC opened the International Operational Center for the Digital Yuan in Shanghai to expand the global influence of its digital currency. The bank also plans to launch pilot programs for cross-border use of the digital yuan with countries such as Singapore, Thailand, Hong Kong, the UAE, and Saudi Arabia.
Expert Opinions
Historical analysis shows that interest-bearing CBDCs could become a new tool in the currency wars of the 21st century. China is setting a precedent for an "attractive" state digital currency, while the USA is limiting its CBDCs, and the EU is considering the introduction of a strictly controlled digital euro. This asymmetry resembles the reserve currency race of the 1970s, when countries competed for the status of international means of payment.
From a systemic risk perspective, the interest-bearing digital yuan creates a unique situation where the central bank has direct access to every transaction while simultaneously encouraging the accumulation of this currency. Such a level of financial transparency has no historical precedent in monetary systems. The question arises: are other central banks ready for a similar "interest race," or will China be able to gain a temporary advantage in the digitization of its economy?
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