The digital yuan (e-CNY) will update its systems to enable interest as the latest phase of its significant growth over the last five years.
The People’s Bank of China (PBoC)is making significant changes to the operational rails underpinning its central bank digital currency, as new data reveals the digital yuan (e-CNY) has processed more than 3.4 billion payments since its first pilot more than five years ago.
Announced on January 1, China’s central bank confirmed a major update to the e-CNY, effectively changing its operational rails to a digital bank deposit system from a digital cash system. This will allow e-CNY transactions to be handled as bank deposit liabilities as opposed to solely a digital form of cash.
The change will enable Chinese banks and payment service providers to earn interest on e-CNY bank deposits similar to traditional cash deposits. Digital wallets holding e-CNY funds will also be protected by the same deposit insurance guidelines.
The PBoC also announced a new roadmap which highlights plans to increase the adoption of e-CNY while also developing practices to improve the efficiency and security of the central bank digital currency (CBDC).
These developments follow the opening of a dedicated e-CNY Operations and Management Centre in Beijing in October 2025. This hub focuses on facilitating domestic transactions, while the International Operations Centre based in Shanghai oversees cross-border payment use cases.
e-CNY cross-border transactions have accounted for 95% of all CBDC payments ($55bn) via the mBridge project – a BIS innovation Hub-led project alongside central banks from China, United Arab Emirates (UAE), Thailand and Hong Kong.
The world’s largest CBDC
Many countries have developed pilot projects for their own dedicated CBDC, including India, Sweden, the UK and Nigeria, but none come as close to the size of e-CNY in terms of volume.
A report from the Atlantic Council highlighted this noting e-CNY transaction volume has grown significantly year-over-year from under $1 trillion in June 2024, to approximately $2.3 trillion by November 2025.
This growth has been supported by regulatory frameworks and distribution to commercial banks with both online and offline functionality.
Initially rolled out as a digital representation of legal tender, during the digital money system era, the first five years of the e-CNY focused on providing businesses and users as an alternative to cash, rather than replacing it, while also preserving the value of the currency’s sovereignty.
Its use cases vary amongst partners. The Agriculture Bank of China is testing the CBDC for B2B supply chain management, while the Bank of Communications has issued five million e-CNY loans to technology companies across the country.
While domestic adoption remains the priority for PBoC and e-CNY officials, plans have been set in place for expansion across borders.
Last year, the e-CNY tested its cross-border capabilities by issuing dedicated CBDC wallets to perform QR code payments for tourists in Hong Kong, Thailand, Singapore and more. The PBoC also took on a more prominent role in the mBridge project as the BIS stepped back, allowing the Chinese central bank to process 95% of all transactions using e-CNY.
Fighting back against stablecoins
The decision to shift the e-CNY to a deposit taking system may also be a reaction to the developing regulatory standards being formed in the US in regards to stablecoin issuance.
The US GENIUS Act, passed in July 2025, enables crypto affiliates to earn interest yield and rewards on the issuance of stablecoins, but is banned for banks and crypto exchanges. While this is currently being debated in the US Senate, the surge in stablecoin interest could threaten CBDC projects like e-CNY from scaling internationally.
Similar to China, the European Union (EU) is preparing a ‘digital euro’ strategy to lead it into a new digital currency age, while also banning interest on regulated stablecoins from banks and crypto asset service providers under the Markets in Crypto Assets (MiCA) framework.
With the EU set for a pivotal European Parliament vote on the legislation of the digital euro, 2026 could prove to be a significant year in the development of CBDCs such as the digital euro and e-CNY.
US President Donald Trump has made it clear the Federal Reserve will not be issuing in any form a CBDC following the passing of the Anti-CBDC Surveillance Act. How China, and the EU, manage to scale their respective CBDCs to important markets like the US remains a challenge in and of itself.
Conversely, not only is China committed in its ban on cryptocurrency, but this has potentially extended to stablecoins after in November 2025 the PBOC defined stablecoins as “a form of virtual currency”, which “cannot effectively meet requirements for customer identification and anti-money laundering”.
