China to Pay Interest on Digital Yuan Starting January 2026

• Commercial banks in China will begin paying interest on digital yuan wallets from 2026.
• Digital yuan balances will get deposit insurance protection, mirroring treatment of traditional bank deposits.
  

China’s central bank will start paying interest on digital yuan holdings from January 1, 2026. This change marks a new phase for the central bank digital currency (CBDC), officially known as the e-CNY. Lu Lei, a deputy governor of the People’s Bank of China (PBOC), confirmed the update in an article published by Financial News

The e-CNY will shift from acting purely as a form of digital cash to being treated as a “digital deposit currency.” The new arrangement comes after nearly a decade of research, testing, and pilot programs. The official pilot began in 2019, although discussions and development began much earlier.

The e-CNY is issued through a two-tier system involving the PBOC and commercial banks. With the update, holders of verified digital yuan wallets will receive interest in line with current deposit pricing regulations that banks follow.

Digital Yuan to Receive Same Protections as Deposits

Digital yuan balances will now have protection under the country’s deposit insurance system. This brings them to the same status as traditional bank deposits in terms of financial security. The adjustment indicates a stronger integration process for the digital currency within the overall operations carried out in the banking sector.

Banks will have expanded scope to manage e-CNY balances within their overall asset and liability setup. The change also lets the digital yuan function more like conventional savings, possibly making it more attractive to both individuals and institutions.

Non-bank payment platforms will also be required to keep full reserve backing for e-CNY transactions. Lu Lei explained that a 100% reserve ratio will apply, similar to the existing customer reserve rules for those platforms.

e-CNY Progress and Barriers to Mass Acceptance

As of November 2025, China recorded 3.48 billion digital yuan transactions with a total value of 16.7 trillion yuan, which equals about 2.38 trillion US dollars. In spite of its scale, the e-CNY is yet to receive wide acceptance..

One of the main reasons for the slow adoption is the fact that consumers are heavily reliant on the mobile payment services already in the market, such as Alipay and WeChat Pay, through which most of the country’s transactions are currently being made.

In response, the PBOC has been looking beyond domestic markets. It has launched efforts to promote the use of digital yuan in international trade. In September, the bank opened the e-CNY International Operation Center in Shanghai.

Notably, it also launched a pilot initiative with Singapore, and it is set to expand its CBDC adoption partnership with other nations including Thailand, Hong Kong, United Arab Emirates, and Saudi Arabia.