The Chinese currency e-CNY changes strategy: from interests to global expansion

A radical transformation awaits China’s digital yuan starting from 2026. The People’s Bank of China is about to introduce a new economic model that will allow commercial banks to offer interest on e-CNY balances, marking a significant evolution after years of limited pilot projects. According to Vice President Lu Lei, this change represents the shift from a digital currency equivalent to cash to a true banking deposit instrument.

From Digital Cash to Deposit Money

The transition launched on January 1st completely changes the nature of Chinese currency. While until now e-CNY functioned as pure digital cash, it will now become a form of deposit at commercial banks, with all the characteristics of traditional bank liabilities.

Banks will be able to:

• Pay interest on verified e-CNY wallets, following self-regulatory rates
• Manage balances according to asset-liability management operations
• Offer insurance protection identical to traditional deposits

This evolution aims to encourage broader use of the Chinese currency in a market where WeChat Pay and Alipay still dominate the contactless payments landscape.

Impressive Numbers and Market Challenges

By November 2025, e-CNY transactions reached 3.48 billion operations, with a total volume of 16.7 trillion yuan ( approximately $2.38 trillion ). Although these numbers placed China’s CBDC program among the most significant worldwide, adoption remains far from established payment platforms.

The central challenge remains unchanged: how to convince consumers to prefer a government digital currency when private solutions already fully meet their daily needs? The introduction of financial incentives through interest payments is an attempt to answer this question.

China’s Global Ambition with Digital Currency

Alongside internal reforms, China is accelerating the international expansion of its digital currency. The PBOC has announced a series of cross-border pilot projects involving Singapore, Thailand, Hong Kong, the United Arab Emirates, and Saudi Arabia.

The strategic plan includes:

• New testing programs for international e-CNY payments
• Creation of an international operational center for the digital yuan in Shanghai
• Promotion of the Chinese currency as a CBDC payment tool in Asian and Middle Eastern markets

Shanghai will become the hub of this global strategy, positioning the Chinese currency as an alternative to current cross-border payment solutions. This approach reflects China’s intention to reduce reliance on international payment infrastructures controlled by other countries.

A Decade of Experiments Leading to a New Era

The path to this moment has been long. The PBOC began initial research on a central bank digital currency in 2014 through the Digital Currency Electronic Payment project. The formal introduction of e-CNY dates back to April 2022, followed by various pilot programs in different cities.

Lu Lei emphasized that this revision represents the consolidation of lessons learned from a decade of experimentation. The new framework will fully come into effect in 2026, marking a crucial moment for the evolution of Chinese currency within the global financial system.

The distinction between government-issued CBDCs like e-CNY and privately issued stablecoins remains a core point of Chinese policy, with authorities continuing to highlight risks of speculation and financial instability associated with private solutions.