Transformation of e-CNY into a currency with interest payment permission
);)
The People's Bank of China (PBOC) announced on the 30th through its affiliated media outlet, the China Financial Times, that it will introduce a new regulatory framework starting January 1st of next year that will allow commercial banks to pay interest on digital yuan wallet balances. This measure represents a policy shift that will transform the digital yuan from a traditional cash substitute into a currency similar to a deposit.
In the article, Lei Lei, Vice Governor of the People's Bank of China, explained that the digital yuan is transitioning from a digital cash to a digital deposit currency, enabling it to be incorporated into banks' asset and liability management systems. He emphasized that the digital yuan can simultaneously serve as a store of value, settlement, and cross-border payments.
While China bans cryptocurrency trading and stablecoins on the mainland, its central bank-issued digital yuan continues to expand. The People's Bank of China is leveraging the efficiency of blockchain-based payment infrastructure while maintaining monetary sovereignty through the e-CNY.
This policy stands in stark contrast to the US, which has banned the introduction of CBDCs. Citing concerns about financial stability and privacy, US President Donald Trump signed an executive order banning the issuance, circulation, and use of CBDCs. Instead, the US is focusing on revamping stablecoin regulations, and in July, the GENIUS Act was enacted, clarifying stablecoin collateral requirements and anti-money laundering standards.
China is also strengthening its institutional foundation to promote e-CNY. The People's Bank of China established the Renminbi International Operations Center in Shanghai in September to expand the use of the digital yuan in cross-border payments and establish cross-chain transfer capabilities.
However, there are also concerns. Alex Gladstein, Chief Strategy Officer of the Human Rights Foundation, warned that central bank digital currencies could expand government control and surveillance powers over payments, and that digital currencies could be used as a means to restrict individuals' access to finance.
Reporter Jeong Ha-yeon yomwork8824@blockstreet.co.kr
