China’s Digital Yuan to Offer Interest and Boost Global Reach in 2026

China will allow banks to pay interest on digital yuan holdings from 2026, transforming the e-CNY into a digital deposit currency and aligning it with traditional deposit protections to boost adoption and global reach.

China is set to implement major upgrades to its digital RMB (e-CNY) starting January 1, 2026. Under the new framework, commercial banks will be able to pay interest on digital yuan holdings, transforming the e-CNY from digital cash to a digital deposit currency. This shift introduces partial reserve management for banks, moving away from the previous 100% reserve requirement, and aligns digital RMB assets with traditional deposit protections under the deposit insurance scheme. The policy aims to incentivize broader adoption by making digital RMB balances more attractive to users and institutions, positioning the currency to compete with traditional bank deposits and established mobile payment platforms. Additionally, China plans to accelerate the cross-border expansion of the e-CNY, including the establishment of an international operations center in Shanghai, to enhance its global influence. As of late 2025, the digital yuan had processed billions of transactions worth trillions of yuan, but adoption has faced challenges due to competition from existing payment systems. The introduction of interest-bearing accounts is expected to drive further adoption and strengthen the digital RMB’s role in both domestic and international financial systems.