Digital Yuan Gains Interest Incentives in Major Policy Shift
China will allow banks to pay interest on digital yuan deposits beginning in 2026, the central bank revealed on Monday. This fundamental change to the digital currency’s design marks a new phase in the country’s long-term project to spur adoption of its central bank digital currency.
According to an article by People’s Bank of China Deputy Governor Lu Lei, the e-CNY is being reclassified from digital cash to “digital deposit currency” under a framework effective January 1, 2026. The shift is intended to make holding the digital currency more attractive by aligning it with conventional deposit features.
The policy revision follows over a decade of pilots and testing. While the digital yuan is a global frontrunner among CBDCs, and despite promotional measures since 2019, encouraging consistent public use has proven difficult. The interest-bearing model addresses a key disadvantage compared to traditional bank savings.
Lu detailed that interest rates will follow self-regulatory agreements on deposit pricing, and digital yuan balances will enjoy deposit insurance protection. Banks will also have expanded flexibility to incorporate these balances into their broader financial management.
For payment service providers, digital yuan reserves will be managed with a 100% reserve ratio, consistent with existing rules for customer funds. The official also reported cumulative transaction data, noting 3.48 billion transactions worth 16.7 trillion yuan ($2.38 trillion) by the end of November 2025.
