China’s central bank is preparing to introduce a major update to its digital yuan framework, allowing commercial banks to offer interest on e-CNY wallet balances starting Jan. 1, 2026. Officials say the change is designed to move the central bank digital currency beyond its initial role as a digital replacement for cash.
Under the new framework, banks will be able to include digital yuan balances within their asset and liability management operations. The shift was outlined by Lu Lei, a deputy governor of the People’s Bank of China, in an article published this week by a PBOC-affiliated financial newspaper.
According to Lei, the digital yuan is entering a new phase of development. He explained that the e-CNY will transition from a digital cash model to what he described as a “digital deposit currency,” giving it functions such as value storage, unit-of-account measurement, and cross-border payment capabilities.
China advances its CBDC despite crypto bans
Although cryptocurrency trading and stablecoins remain prohibited in mainland China, the central bank has continued to expand its CBDC infrastructure. Policymakers aim to harness the efficiency of blockchain-based payment rails while maintaining full central bank control through a state-issued digital currency.
This approach stands in sharp contrast to the United States. In the U.S., President Donald Trump has taken an opposing stance on central bank digital currencies, citing concerns over financial stability, privacy, and national sovereignty.
In January, Trump signed an executive order banning the creation, issuance, and circulation of a U.S. CBDC. The move was widely viewed as a pivotal development for the American crypto sector. Later in the year, the administration approved the GENIUS Act, the country’s first comprehensive stablecoin framework, which established clear collateral requirements and reinforced Anti-Money Laundering compliance.
China’s action plan to accelerate e-CNY adoption
China’s latest policy update is part of a broader initiative titled the “Action Plan on Further Strengthening the Digital RMB Management Service System and Related Financial Infrastructure Construction.” The plan aims to expand nationwide e-CNY usage while upgrading the technical infrastructure needed to support it.
As part of this effort, the central bank launched the RMB International Operations Center in Shanghai in September. The platform is designed to support onchain settlement tools and cross-chain transfer functionality, with a focus on promoting the digital yuan in cross-border transactions.
Officials argue that the expanded e-CNY framework could improve efficiency and financial inclusion. However, critics warn that it may also increase the central bank’s influence over payment flows.
Concerns over financial control and surveillance
Some analysts have raised concerns that a fully integrated digital yuan could give authorities deeper oversight of individual transactions. Alex Gladstein, chief strategy officer at the Human Rights Foundation, has argued that greater control over a digital currency could expand the government’s ability to monitor payments and restrict access.
He previously noted that while Chinese authorities already exert significant control over major private payment platforms, direct oversight of a central bank digital currency could provide even more data and enforcement power. These concerns were echoed in comments he made to MIT Technology Review in earlier interviews.
As China pushes forward with interest-bearing digital yuan wallets, the move highlights a growing global divide over how digital money should be designed, regulated, and controlled.
