Business & Economics
China Approves Interest-Bearing Digital Yuan Deposits from 1 Jan 2026
Beijing has authorised commercial banks to start paying demand-deposit interest on verified e-CNY wallets on 1 January 2026, upgrading the CBDC from a cash-like token to an insured, bank-book deposit.
Focusing Facts
- Framework effective 1 Jan 2026 obliges banks to credit interest on e-CNY balances at prevailing demand-deposit rates.
- By Nov 2025 the digital yuan had processed 16.7 trillion yuan in 3.48 billion transactions across 230 million personal wallets.
- e-CNY holdings will now be covered by China’s national deposit-insurance scheme, matching protection on conventional deposits.
Context
When the U.S. scrapped Regulation Q limits with the 1980 Depository Institutions Deregulation Act, banks were finally allowed to pay interest on checking accounts to stop funds leaking to higher-yield money-market funds; China’s move is a digital echo, aimed at stemming capital and data flow to Alipay, WeChat Pay and offshore stablecoins. It also folds the CBDC into the banking balance-sheet, reinforcing state oversight while giving the PBOC a new, highly granular monetary-policy lever. The step fits a broader 21st-century trend toward programmable, account-based sovereign money that can settle instantly across borders (see the mBridge pilot) and compete with private tokens. Over a 100-year horizon this could tilt payment architecture away from dollar-centric rails—if users trust Beijing’s governance and capital controls. Otherwise it may join Japan’s 1999 e-money trials as a technically advanced but geopolitically contained experiment. Either outcome signals that the future of legal tender is migrating from paper to policy-coded software, with interest features as just the opening salvo.
Perspectives
Chinese state-controlled media
e.g., Global Times, CCTV — Portrays the interest-bearing digital yuan as a strategic upgrade that will strengthen the currency’s safety, efficiency and boost China’s influence in global finance. Nationalistic framing prioritises China’s leadership narrative and omits discussion of surveillance, privacy or limited retail uptake, mirroring official PBOC talking points.
Crypto-industry and tech outlets
e.g., Cointelegraph, Gizmodo — Argue that the move is meant to counter stablecoins and crypto, yet the low rates and centralised control mean the digital yuan still cannot compete with decentralised assets, driving some users toward workarounds like ‘U cards’. Have a vested interest in spotlighting shortcomings of state-run CBDCs and promoting the superiority of private crypto, so they magnify limitations and gloss over policy or financial-inclusion benefits.
Financial trade and payments press
e.g., FinanceFeeds, PaymentsJournal — Describes the shift to an interest-bearing model as a pragmatic evolution that will overcome adoption bottlenecks, integrate e-CNY into banking operations and support cross-border ambitions. Commercial focus leads to heavy reliance on official data and industry sources, tending to highlight business upside while under-scrutinising surveillance concerns or systemic risks to deposits.