China’s Digital Yuan to Earn Interest in 2026 Adoption Push

China has unveiled a major upgrade to its digital yuan, enabling interest payments from banks starting in 2026. The People’s Bank of China announced the policy shift on Monday, targeting increased adoption by making the central bank digital currency more competitive with conventional bank deposits.

PBOC Deputy Governor Lu Lei authored a key article stating that the e-CNY will be redefined as “digital deposit currency,” moving beyond its original concept as mere digital cash. This new operational framework is scheduled to take effect at the start of 2026, concluding a lengthy period of pilots and experimentation.

The digital yuan is often cited as one of the most advanced CBDCs globally. However, public uptake has not met expectations despite sustained state promotion since the 2019 pilot. By introducing interest earnings, authorities aim to provide a tangible incentive for citizens and businesses to hold the digital currency long-term.

The plan stipulates that interest on verified wallets will be set in accordance with existing deposit rate agreements. User balances will be safeguarded by the national deposit insurance system. Furthermore, banks receive enhanced autonomy to manage digital yuan within their asset-liability portfolios.

The policy also standardizes reserve treatment for payment institutions, applying a 100% reserve ratio to digital yuan funds. Lu confirmed that, as of late November 2025, the cumulative transaction value for the e-CNY stood at 16.7 trillion yuan ($2.38 trillion) across billions of transactions.