The People's Bank of China published a plan on 29 December 2025 that would allow holders of the digital yuan, or e-CNY, to earn interest on their wallet balances at rates equivalent to demand deposits, with the change scheduled to take effect from 1 January 2026. The document, formally titled the Action Plan on Further Strengthening Digital RMB Management, marks a significant and technically consequential shift in the design philosophy underlying China's central bank digital currency programme, one of the most advanced and widely piloted CBDC initiatives in the world.
If implemented as outlined, the e-CNY would become the first central bank digital currency issued by a major economy to carry an explicit positive interest rate on retail wallet balances. Other advanced-economy CBDC projects currently under development or in limited pilot operation — including the digital euro and exploratory Federal Reserve work on a potential digital dollar — have generally proceeded on the working assumption that retail CBDCs would be designed as non-interest-bearing instruments, in part to limit their potential to draw deposits away from commercial banks at scale.
INTEREST AT DEMAND DEPOSIT RATES FROM JANUARY 2026
The action plan specifies that e-CNY wallets would accrue interest at the same rate that applies to demand deposits held at Chinese commercial banks. Demand deposit rates in China are set with reference to benchmark guidance from the PBoC and are typically low in absolute terms, but the introduction of any positive yield on CBDC balances represents a fundamental departure from the design principles that have guided most other major CBDC programmes. Even a modest interest rate creates a material difference between holding digital yuan and holding physical renminbi cash, which by definition carries no return, and removes one of the principal frictions that has limited consumer incentives to convert bank balances into e-CNY wallets.
The PBoC's decision to incorporate an interest-bearing feature addresses a structural challenge that has constrained the uptake of digital yuan despite several years of pilot programmes in major Chinese cities including Shanghai, Beijing and Shenzhen. Without a financial incentive to hold e-CNY balances in preference to conventional demand deposits, consumers and businesses have had limited reason to maintain or grow their wallet balances beyond those needed for specific transactions. The introduction of an interest rate aligned with demand deposit benchmarks creates a more level competitive playing field between digital currency wallets and the commercial banking system for the portion of savings held at the most liquid end of the maturity spectrum.
CHINA LEADS MAJOR ECONOMIES ON CBDC DESIGN
The publication of the action plan positions China as the first major economy to move toward an interest-bearing retail CBDC at national scale, a distinction that is expected to attract close attention from central banks in Europe, North America and across Asia that have been monitoring the Chinese digital currency experiment. The choice to make the e-CNY interest-bearing will add a further dimension to the ongoing international debate about the optimal design of central bank digital currencies, which has previously centred on questions of privacy, offline functionality, programmability and the appropriate relationship between retail CBDCs and commercial bank deposit funding.
The action plan was published through official Chinese government news channels and confirmed in reporting by international wire services. The PBoC described the measures as intended to further strengthen management of the digital renminbi and to support the currency's broader role within the domestic payments and financial system. Analysts will be monitoring closely how retail users, commercial banks and businesses respond once the interest-bearing feature is activated at the start of the new year, with the volume and pattern of wallet balance growth likely to serve as an early signal of whether the policy change succeeds in driving meaningful additional adoption of the digital currency.