Digital Yuan: China’s Plan to Boost Adoption
A key innovation is that holdings of China’s digital yuan—also known as the e-CNY—will begin to earn interest starting next year.
Quick overview
- Starting January 1, China will implement an action plan to promote the digital yuan, allowing nationwide access and operation.
- The digital yuan will provide the central bank with enhanced data access and control over payment flows, reducing dependence on major tech platforms.
- For the first time, the digital yuan will earn interest, encouraging adoption and marking a shift towards digital deposits.
- The plan includes launching a next-generation system and establishing an international operations center in Shanghai to expand the currency's global role.
Beginning January 1, China will roll out an official “action plan” to promote the use and circulation of its digital currency.
According to Lu Lei, Vice Governor of the People’s Bank of China (PBOC), which has been running pilot programs since 2014, users across the country will be able to access and operate with the digital yuan.
Although Chinese consumers already rely heavily on online and mobile payments, the digital yuan is expected to give the central bank greater access to data and control over payment flows, reducing reliance on large technology platforms. “The future digital yuan will be a modern form of digital payment and circulation issued within the financial system,” Lu said.
A key innovation is that holdings of China’s digital yuan—also known as the e-CNY—will begin to earn interest starting next year, according to state broadcaster CCTV. This would make it the world’s first central bank digital currency (CBDC) to pay interest, marking a shift toward the era of so-called “digital deposits,” rather than simply digital cash.
According to state media, paying interest on digital yuan balances is intended to increase user willingness to adopt the currency, expand its use cases, and further consolidate China’s leading position in the global exploration of central bank digital currencies.
What the Action Plan Includes
Lu said that a “next-generation” system for the digital yuan will be launched on January 1, incorporating a comprehensive framework that includes measurement standards, management systems, operational mechanisms, and a supporting ecosystem. Under this structure, banks will pay interest on customers’ digital yuan balances to encourage broader adoption.
The plan also proposes the establishment of an international digital yuan operations center in Shanghai, signaling China’s ambition to expand the currency’s role beyond domestic use.
At the same time, the PBOC has reaffirmed its strict stance on cryptocurrencies. Last month, the central bank pledged to intensify its crackdown on illegal activities involving stablecoins, while simultaneously accelerating efforts to promote the use of its own sovereign digital currency.
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