China to Pay Interest on Digital Yuan Wallets in Bid to Boost Adoption
China's central bank will mandate commercial banks to pay interest on digital yuan holdings starting January 2026, marking a strategic shift in the e-CNY's positioning from cash-like utility to deposit-like financial instrument. The People's Bank of China's new framework brings digital wallet balances under deposit insurance protections while requiring 100% reserve backing for non-bank payment providers.
Transaction volumes reveal substantial traction, with 3.48 billion e-CNY transactions totaling ¥16.7 trillion ($2.37 trillion) recorded through November 2025. The interest rate mechanism will mirror existing deposit account structures, potentially reshaping consumer liquidity preferences as the interest-bearing, insured digital currency gains appeal over traditional savings vehicles.
