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China to allow banks to pay interest on digital yuan wallets

Written by Isaac FrancisPublished Dec. 30 2025Last Updated Dec. 30 2025

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China’s central bank will allow commercial banks to pay interest on digital yuan wallet balances starting Jan. 1, 2026.

The move marks a significant shift in how the e-CNY is positioned within China’s financial system.

Officials said the change will move the digital yuan beyond its original role as a cash substitute.

The new framework allows banks to treat e-CNY balances as part of asset and liability management.

Lu Lei, deputy governor of the People’s Bank of China, outlined the plan in a policy commentary.

The digital RMB will move from the digital cash era to the digital deposit currency era.

Lu Lei said.

He added that the digital yuan will function as a store of value and payment instrument.

Interest-bearing wallets could make the e-CNY more attractive to households and businesses.

China continues to prohibit cryptocurrency trading and stablecoin usage on the mainland.

Despite the ban, the PBOC is expanding blockchain-based infrastructure through the e-CNY.

The initiative contrasts with recent policy developments in the United States.

US President Donald Trump signed an executive order banning a US central bank digital currency.

The order cited concerns over financial stability, privacy and national sovereignty.

Analysts said the decision reshaped the US approach to digital money innovation.

In July, the US adopted the GENIUS Act to regulate payment stablecoins.

The legislation established rules for collateral backing and AML compliance.

China’s new “Action Plan” seeks to accelerate nationwide e-CNY adoption.

The plan also focuses on strengthening supporting financial infrastructure.

In September, China launched the RMB International Operations Center in Shanghai.

The centre aims to promote cross-border settlement using blockchain technology.

Officials said onchain settlement tools could support international e-CNY usage.

Critics argue the digital yuan could expand state oversight of payments.

The Chinese government wants more control over payments.

Alex Gladstein said.

He warned that a centralised digital currency could increase data collection powers.

Observers said the policy highlights diverging global approaches to digital currencies.

China’s interest-bearing e-CNY could reshape competition with traditional bank deposits.