(Yicai) Dec. 30 — China’s central bank said banking institutions will be required to pay interest on balances held in customers’ real-name digital yuan wallets starting from Jan. 1, 2026, in a move aimed at increasing public and market adoption of the digital currency.

The policy, announced yesterday, marks an expansion of the digital yuan’s monetary positioning from cash in circulation to deposits. Previously, the digital yuan was classified as M0, meaning it functioned as digital cash and did not bear interest, leaving users exposed to inflation erosion and the loss of time value.

A market expert told Yicai that after the upgrade, banks will calculate interest on real-name digital yuan wallet balances by referencing their own listed demand deposit interest rates. The expert added that commercial banks have already completed all system upgrades required for accounting digital yuan interest.

In terms of the regulation of non-bank payment institutions, the policy clarified that the management standards for digital yuan margin funds are no different from those for customer reserve funds held by non-bank payment institutions. Such institutions briefly paid interest on customer reserve funds between 2019 and 2022, but the policy expired at the end of 2022 and was not renewed, leaving reserve funds non-interest-bearing.

Research on the digital yuan began in 2014 and has since expanded through pilot programs. As of the end of November 2025, the digital yuan had processed a cumulative 3.5 billion transactions with a total value exceeding CNY16.7 trillion (USD2.4 trillion). The number of personal wallets reached 230 million, while corporate wallets totaled 18.8 million, indicating broad market acceptance.

In cross-border payments, the multi-central bank digital currency bridge, known as mBridge, has delivered notable results, handling almost 4,050 cross-border payment transactions worth the equivalent of CNY387.2 billion (USD55.3 billion), with digital yuan transactions accounting for more than 95 percent of the total.

Editor: Emmi Laine