Starting January 1, 2026, banks in China will be permitted to offer interest on balances held in digital yuan wallets, marking a significant shift in the functionality of the e-CNY. This initiative, announced by the People’s Bank of China (PBOC), is designed to evolve the digital currency from merely acting as a cash substitute to functioning similarly to traditional deposits.
Lu Lei, a deputy governor of the PBOC, highlighted that this new framework enables banks to incorporate the digital yuan into their asset-liability management more effectively. He emphasized that the digital renminbi will transition into a new era characterized as Digital Deposit Money, which includes features such as value storage, monetary scale, and capabilities for cross-border transactions.
Despite the ban on cryptocurrency and stablecoin transactions in Mainland China, the PBOC remains focused on advancing its central bank digital currency framework. This contrasts sharply with the U.S. stance, where a recent executive order prohibits the establishment of CBDCs due to concerns regarding financial stability and privacy.