DECEMBER 31, 2025 — China is set to break new ground in digital finance as its central bank confirmed that holdings of the digital yuan, or e-CNY, will begin earning interest starting January 1, 2026. The move positions Beijing as the first country to transform a central bank digital currency into an interest-bearing asset, shifting it from “digital cash” into what officials describe as “digital deposits.”

State broadcaster CCTV reported that balances stored in e-CNY wallets will accrue interest based on demand deposit rates. 

“This will help increase users’ willingness to adopt the digital yuan, expand its usage scenarios, and further solidify China’s leading position in the global exploration of central bank digital currencies,” CCTV said.

The rollout comes as the People’s Bank of China (PBOC) intensifies efforts to push its own digital currency while maintaining a hard line against cryptocurrencies and stablecoins. Just last month, the PBOC vowed to crack down on illegal crypto-related activities, underscoring its determination to keep financial control firmly within state hands.

At present, e-CNY use remains limited, mostly confined to government agencies and state-owned enterprises. Everyday transactions in China are still dominated by private platforms Alipay and WeChat Pay. But with the new framework, the central bank is betting that interest-bearing wallets will entice more citizens and institutions to shift toward its state-backed system.

The PBOC has already established a global operations center in Shanghai to promote international adoption of the digital yuan. It also announced plans to expand commercial bank participation in e-CNY services, alongside a forthcoming action plan on digital yuan management.

The question is, will earning interest be enough to convince millions to switch from familiar payment apps to a government-issued alternative? And beyond China’s borders, what does this mean for countries eager to jump on the digital currency bandwagon?

China’s bold step signals more than financial innovation — it is a statement of power. By turning its digital yuan into a deposit-like instrument, Beijing is not only reshaping domestic finance but also sending a message to the world: it is ready to lead in the next era of money.

(Image: Yahoo Finance)