Starting from January 1, 2026, China will introduce interest payments for holders of the digital yuan (e-CNY), making it the first country to implement such a measure. These payments will be similar to interest on demand deposits and will be credited to users' wallets.
The People's Bank of China (PBOC) published information about the new digital yuan management system, presented by Lu Lei, the deputy governor of PBOC, in an article in the official newspaper Financial News. He stated that the digital yuan is transitioning from the concept of "digital money" to "digital deposit currency."
Change in Global Policy
This decision contradicts international trends, according to which central bank digital currencies (CBDCs) should remain interest-free. Organizations such as the European Central Bank and the Federal Reserve System of the United States warn against accruing interest on CBDCs, believing that it could threaten financial stability.
The new system is based on the "Action Plan for Strengthening the Management of the Digital Yuan and Financial Infrastructure." Interest payments will only apply to verified wallets for individuals and legal entities, while anonymous wallets will remain interest-free. Accruals will occur quarterly, on the 20th of the last month of each quarter, at demand deposit rates.
Analyst Wang Jian from Guoxin Securities believes that the shift to an interest-bearing model represents an evolution from "digital money 1.0" to "deposit currency 2.0," describing it as "a new type of bank account" that combines traditional payment capabilities with new contractual features.
Successes of the Digital Yuan
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 totaled 18.84 million.
The multi-currency bridge platform (mBridge) processed 4,047 cross-border payments amounting to 387.2 billion yuan ($54.21 billion), with 95.3% of all transactions being conducted in digital yuan.
Market Competition
The introduction of interest aims to enhance the attractiveness of the digital yuan amid fierce competition with payment systems like Alipay and WeChat Pay, which dominate in China. Previously, the digital yuan was primarily used as a means of payment without the ability to accumulate.
Balances of the digital yuan will be protected similarly to regular bank deposits through a national insurance system. Commercial banks will be able to manage these balances as part of their assets and liabilities, providing them with greater flexibility in operations.
In September 2025, the PBOC established the International Operating Center for the Digital Yuan in Shanghai to expand the global influence of its currency. The bank plans to launch pilot projects for cross-border use of the digital yuan with Singapore, Thailand, Hong Kong, the UAE, and Saudi Arabia.
Situation Analysis
Historical analysis shows that interest-bearing CBDCs could become a new tool in the currency wars of the 21st century. China is effectively creating a precedent for an "attractive" state digital currency at a time when the U.S. is moving away from its CBDCs, and the EU is developing a limited digital euro. This situation resembles the reserve currency race of the 1970s, when countries competed for the status of an international means of payment.
At the same time, the introduction of interest on the digital yuan creates unique systemic risks: the central bank gains direct access to every citizen's transaction and creates incentives to accumulate this particular currency. This level of financial transparency has no historical precedent in the monetary system. The question remains open: are other central banks ready for such a "race for interest," or will China gain a temporary advantage in the digitization of the economy?
Source: hashtelegraph.com
