China Allows Banks to Offer Interest on Digital Yuan Wallets Starting 2026

Starting January 1, 2026, Chinese banks will be able to pay interest on digital yuan wallet balances

The People's Bank of China has announced that, beginning January 1, 2026, commercial banks will be permitted to pay interest on balances held in digital yuan (e-CNY) wallets. This measure is set to transform the digital currency into an instrument akin to traditional deposits. Lu Lei, the vice-governor of the People's Bank of China, explained that this change will extend the use of the digital yuan beyond its original role as a cash substitute. The new structure for the digital currency will allow banks to consider digital yuan as part of their asset and liability operations.

"The digital yuan will shift from the era of digital cash to the era of digital deposit currency," said Lei. "This will feature functions for monetary value scaling, value storage, and cross-border payments." While transactions involving cryptocurrencies and stablecoins are prohibited on the Chinese mainland, the central bank is continuing to develop its Central Bank Digital Currency (CBDC), aiming to leverage blockchain technology efficiency to provide a centrally issued digital cash alternative.

In contrast to the pro-stablecoin approach of the United States, which has banned the creation of CBDCs for financial stability reasons, China's initiative aims to accelerate the adoption of e-CNY by building the necessary infrastructure and promoting the use of digital stablecoins. However, some critics express concerns that the digital yuan could provide the Chinese government with greater control over citizens' payment activities and personal data.