Yuan Digital of China: From Digital Currency to Digital Deposit

The People’s Bank of China (PBOC) has announced an unprecedented breakthrough in the development of its digital currency. In an official statement on December 29, the institution revealed fundamental changes that will shape the future of its CBDC over the coming years, thus consolidating a decade of research and experimentation in this field.

Transformation of the Digital Yuan Structure

The most significant renewal lies in the operational change of the e-CNY. The digital yuan has evolved from functioning exclusively as electronic cash to operating under a digital deposit model, allowing commercial banks to offer yields on the balances maintained by users in their verified wallets. This reconfiguration will take effect on January 1, 2026.

Lu Lei, Vice Governor of the PBOC, confirmed that this transition responds to a self-regulatory framework previously established regarding deposit rate setting. Funds in digital yuan will enjoy the same protection as any traditional deposit under the Chinese deposit insurance system, fostering greater confidence in the adoption of the digital currency.

Two-Tier Operational Model and Central Oversight

The PBOC maintains its two-layer management architecture. The central bank sets the master rules and technical standards for the RMB Digital, while commercial financial institutions are responsible for managing the direct relationship with end users. This model allows scaling the infrastructure without compromising centralized oversight.

This measure represents a strategic popular cash advance by linking mass adoption with direct economic incentives. Depositors will have concrete motivation to use the e-CNY instead of conventional cash or traditional bank transfers.

Implementation Trajectory and Previous Pilots

Digital yuan pilot programs began in 2019, gradually expanding to multiple cities. In 2023, the PBOC established an industrial park in the Luohu district of Shenzhen, focused on developing payment solutions, smart wallets, and other complementary applications. These initiatives laid the groundwork for the transition now formalized.

The e-CNY is already recognized internationally as one of the most sophisticated central bank digital currencies under development. The recent advance consolidates China as a pioneer in the functional and economic integration of CBDC into its financial system.