Since its launch in 2014, China's digital yuan (E-CNY) has undergone years of research and pilot programs, but it has not yet been officially launched throughout China, and its usage is still limited. Therefore, on December 29, the People's Bank of China officially announced a policy breakthrough, which will formally include the digital yuan in the interest payment mechanism starting in 2026, in an attempt to further increase the incentive for its use.
Despite more than a decade of efforts, the digital yuan has still not been fully implemented.
The People's Bank of China officially launched the research and development of the digital yuan in 2014, becoming one of the first major economies in the world to invest in a central bank monetary (CBDC) program. Over the following decade, China continued to test and adjust related technologies and systems.
From 2019 to 2024, the pilot scope of the digital RMB has been gradually expanded, covering more than half of China's provinces. However, in terms of actual use, it still faces competition from mature mobile payment platforms such as WeChat Pay and Alipay. The overall penetration rate is growing slowly, and it has not yet been officially launched throughout China.
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With adjustments to its institutional positioning, the central bank has approved interest payments on several denominations of RMB.
After years of promotion, the People's Bank of China (PBOC) announced a key policy shift on December 29th this year. PBOC Vice Governor Lu Lei stated that starting January 1, 2026, commercial banks operating digital RMB wallets will pay interest based on the amount of digital RMB held by users.
This also means that the digital RMB will have the same status as commercial bank deposits, and will no longer be limited to the role of a payment tool.
With the interest rate environment depressed, the effectiveness of interest payment incentives remains to be seen.
As the digital yuan announced its interest payment, China's overall interest rate environment remained low. After years of interest rate cuts, the demand deposit rate at major Chinese banks has fallen to approximately 0.05%.
Meanwhile, the banking system also faces structural pressures, including continuously rising household savings, loan growth falling to a historical low, and issues such as high deposit levels and difficulty in disposing of funds. Against this backdrop, whether the digital RMB interest payment mechanism can substantially change user behavior remains uncertain.
Cross-border expansion faltered, but domestic development accelerated.
In terms of international expansion, China has collaborated with central banks of several countries to promote the multilateral cross-border payment platform mBridge. However, the project was thwarted in 2024 by the withdrawal of the Bank for International Settlements (BIS). Concerns included the possibility that the system could be used to circumvent sanctions against Russia and its impact on the dollar system.
Back in China, the official pace of promotion accelerated significantly in the second half of 2025. In September of this year, the People's Bank of China established the "Digital RMB Operation Center" in Shanghai, housing platforms related to cross-border payments, blockchain technology, and digital assets. In October, China also explicitly stated in its latest five-year plan that it would "steadily promote the development of the digital RMB."
With a clear policy direction, transaction volume continues to accumulate.
In terms of policy direction, compared to the United States and other countries that allow privately issued stablecoins backed by cash or cash-like assets, China continues to increase its investment in the officially led digital yuan. Even though discussions about stablecoins emerged in the summer of 2025, the regulatory authorities have made it clear that they remain highly vigilant against speculation, fraud, and financial stability risks.
As of the end of November 2025, the cumulative number of digital RMB transactions reached 3.48 billion, with a total amount of RMB 16.7 trillion (approximately USD 2.38 trillion). The subsequent promotion effect will be continuously monitored after the official interest payment in 2026.
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This article, which discusses China's decision to finalize a digital RMB interest payment mechanism and its official launch in 2026, first appeared on ABMedia, a ABMedia .
