A customer tries a payment with e-CNY at the 8th China International Import Expo in Shanghai on November 8, 2025. Photo: VCG

A manager at a state-owned enterprise based in Fuzhou, capital of East China's Fujian Province, surnamed Zheng, opened his digital yuan wallet app on Tuesday and noticed an interest rate of 0.05 percent displayed on the screen. Since last year, Zheng has received a portion of his monthly salary in the form of digital yuan, or e-CNY, which he has kept inside the digital wallet.

"It is much more convenient now, as I can pay directly at convenience stores or platforms such as JD.com, and occasionally enjoy discounts," Zheng said. He noted that the digital yuan in the wallet has started generating interest income this year, which makes him "more willing to keep some pocket money in the wallet."

On January 1, with the launch of an action plan by the People's Bank of China (PBC), the country's central bank, which lays out a new framework for the measurement, management, operation and ecosystem building of the digital yuan, the digital yuan officially entered into the 2.0 era.

An important feature unlocked by the 2.0 version is interest accrual based on demand deposit rates. The upgrade makes the digital yuan the world's first interest-bearing central bank digital currency and signals that e-CNY is moving from "digital cash" to "digital deposits," according to China Central Television (CCTV).  

According to the official introduction in the digital yuan wallet app, e-CNY is a legal tender digital currency issued by the PBC, together with its associated payment system. It adopts a two-tier operational structure, under which the PBC issues the currency to digital yuan operating institutions, which then distribute it to the public. 

China began research on the digital yuan as early as 2014, with the app launched in 2022, according to media reports. The pilot scope has since expanded from initial key cities to the provincial and autonomous region level, covering first-tier cities such as Beijing and Shanghai, as well as provinces including East China's Jiangsu, South China's Guangdong, and Southwest China's Sichuan, news portal 21jingji.com reported.

Analysts said that the development of the digital yuan is entering a new phase focused on deepening application scenarios and building a broader ecosystem, with the legal tender set to play a greater role in fintech innovation, including cross-border payments. Its future development is expected to become more flexible, focusing on specific areas such as leveraging local advantageous resources or addressing key livelihood-related pain points.

'A great leap'

On January 28, the Industrial and Commercial Bank of China (ICBC) Beijing Branch announced it had processed a digital yuan loan totaling 1 billion yuan. This marked the first digital yuan loan within the ICBC system since the introduction of the interest-bearing function.

Industry insiders said that the interest-bearing function of the digital yuan, which took effect at the beginning of 2026, is a milestone development that marks "a great leap" in China's monetary system. This means that, for the first time, the digital yuan stands on the same competitive footing as commercial bank deposits in terms of monetary completeness. At the same time, it retains unlimited legal tender status as a direct liability of the central bank, while also maintaining the technical advantage of programmability.

Dong Ximiao, chief researcher at Zhaolian Consumer Finance and deputy director of the Shanghai Finance and Development Laboratory, told the Global Times on Tuesday that the new function has significantly elevated the digital yuan's monetary positioning.

"Moving from 'digital cash' to 'digital deposits' means the digital yuan is equipped with full-scenario monetary capabilities. Its application scenarios will become richer and more diverse, enabling wider use in areas such as wholesale and retail, public services, social governance and cross-border settlements, which effectively distinguish it from other payment instruments," Dong said.

Wang Peng, an associate research fellow at the Beijing Academy of Social Sciences, told the Global Times on Tuesday that he expects the digital yuan to become a new engine in the global expansion of the Chinese yuan. 

"It will no longer merely serve as a substitute for cash, but also as a new cornerstone connecting the real economy, data assets and global trade," Wang said. He noted that by leveraging smart contract technology, the digital yuan enables more efficient payment equals settlement in complex financial scenarios such as cross-border trade and targeted subsidy distribution - compared with traditional tools. 

According to China's 15th Five-Year Plan (2026-30), secure and efficient financial infrastructure should be put in place, and the digital renminbi (RMB) should be steadily developed in the next five years.

Under the plan, various Chinese localities have launched initiatives emphasizing the digital yuan's role in cross-border payment services. 

For example, Shanghai aims to closely align with cross-border service requirements in the digital yuan 2.0 era and plans to bolster cross-border financial service capabilities through the Digital Yuan International Operations Center, which was established in September 2025, according to the Beijing Daily. 

Also, Southwest China's Yunnan Province, capitalizing on its advantageous border location, has designated the construction of digital yuan border trade scenarios as a key priority for 2026. The province plans to further promote cross-border QR code payments between China and Vietnam, as well as between China and Laos, while exploring new mechanisms for integrated management of cross-border yuan flows, according to media reports. 

A clear roadmap

By the end of November 2025, the digital yuan had recorded a cumulative total of 3.48 billion transactions, amounting to 16.7 trillion yuan, according to data released by the central bank. Through the digital yuan wallet app, a total of 230 million personal wallets and 18.84 million corporate wallets had been opened.

China has a clear roadmap for the technical architecture of the digital yuan. In November, the PBC reaffirmed its tough stance on cryptocurrencies and vowed to crack down on illegal activities involving stablecoins.

Analysts noted that unlike the decentralized and disintermediated technical routes of crypto assets, the digital yuan adheres to an "account-based" approach that is compatible with distributed ledger technology features, combining the advantages of account-based management with the efficiency of blockchain technology.

"Currently, cryptocurrencies and stablecoins adopt a value-based technical route as their fundamental approach, leading to a common perception that only the application of blockchain constitutes a true digital currency. China's pilot programs and practical experience have demonstrated that by being fundamentally account-based and utilizing digital technologies such as smart contracts, it is possible to deliver digital currency payment services that are lower in cost and higher in efficiency," Lu Lei, deputy governor of the PBC, wrote in an article published on the Financial News.