China is preparing for one of the most critical steps yet in its digital yuan project. The country's central bank announced that a new framework allowing commercial banks to pay interest on digital yuan balances will come into effect on January 1, 2026. With this change, e-CNY will cease to be merely "digital cash" and will effectively become "digital deposit money." The announcement was made public through an article by Lu Lei, Vice President of the People's Bank of China, published in the state newspaper Financial News. According to Lu, this regulation is a natural result of pilot studies that have been ongoing for about a decade and a testing process that has accelerated in the last five years. Although China is considered one of the world's leading countries in terms of technical capacity and scale of implementation in the CBDC field, adoption rates have not yet reached the expected level.
Under the new framework, interest can be paid on balances held in verified digital yuan wallets in accordance with existing deposit pricing agreements. Furthermore, digital yuan balances will have the same protection as traditional bank deposits under China's deposit insurance system. This significantly strengthens the status of e-CNY within the banking system.
The regulation also provides banks with greater flexibility in terms of balance sheet and liquidity management. Digital yuan balances can be actively used in banks' asset and liability management. For non-bank payment institutions, digital yuan reserves will be treated the same as existing customer reserves and a 100% reserve requirement will apply.
Digital yuan usage is quite widespread
According to official data, the use of digital yuan in China has reached significant volumes. As of the end of November 2025, a total of 3.48 billion transactions were carried out, with a cumulative transaction volume of 16.7 trillion yuan. While these figures show that the e-CNY infrastructure is widely operational, they also indicate that its adoption rate in daily life remains limited. One of the main reasons for this is the long-standing dominance of mobile payment platforms in China. WeChat Pay and Alipay have largely determined user habits. The digital yuan is struggling to compete with this established ecosystem. Furthermore, concerns about centralized monitoring and anxieties associated with the social credit system are leading some to approach e-CNY with caution. Therefore, it appears that the use of paper money has not completely disappeared. On the other hand, the Beijing administration is also taking steps to expand the international use of the digital yuan. The central bank is planning pilot studies with Singapore to increase the use of e-CNY in cross-border payments. In addition, CBDC-based payment systems are on the agenda with markets such as Thailand, Hong Kong, the United Arab Emirates, and Saudi Arabia. The e-CNY International Operations Center established in Shanghai is also seen as an important part of this global expansion. Despite all these developments, China maintains its strict stance on cryptocurrencies. Cryptocurrency trading and mining activities have been banned in the country since 2021. While the Chinese government adopts blockchain technology as a strategic infrastructure, it prioritizes the digital yuan model, which is entirely controlled by the central bank.
