China reclassifies e-CNY as digital deposit; banks must pay interest from Jan 1, 2026
The People’s Bank of China (PBOC) has issued an action plan that reclassifies the digital yuan (e-CNY) from digital cash to a “digital deposit currency” and requires commercial banks operating verified e-CNY wallets to pay interest on balances starting January 1, 2026. Under the new framework, verified e-CNY balances will receive protections aligned with national deposit insurance, while the PBOC retains rulemaking and technical responsibilities under its two-tier model and banks handle end-user services. Non-bank payment providers must hold full reserves in e-CNY. The move follows roughly a decade of pilots beginning in 2019 and aims to boost consumer adoption after slower uptake versus Alipay and WeChat Pay; official figures show billions of transactions in pilot programs. The plan also expands cross‑border pilots and establishes an international operations center in Shanghai to promote broader international use and supporting infrastructure such as custody, smart contracts, and expanded merchant acceptance. For traders: the change narrows functional differences between e-CNY and bank deposits, increases deposit-like demand incentives for e-CNY holdings, and signals stronger state support and potential on‑chain/integration upgrades — factors that could affect liquidity flows between domestic stablecoins, bank deposits and other payment rails.
Neutral
Short-term market impact on the e-CNY price is likely neutral because the e-CNY is a central bank digital currency (CDBC) without a market-traded token whose price fluctuates like retail crypto assets. Reclassifying e-CNY as a digital deposit and mandating interest removes a primary functional gap with bank deposits, which may shift liquidity between cash-like holdings and bank deposits or domestic stablecoins but does not introduce a tradable asset that would see direct price discovery. For traders, near-term effects may include modest reallocations: reduced demand for domestic privately issued stablecoins or short-term bank products if e-CNY becomes a yield-bearing, insured vehicle; increased on‑chain activity where e-CNY is integrated with smart-contract pilots; and temporary volatility in payment-rail tokens or equities tied to Chinese payment processors as adoption signals change. Long-term, formalizing interest-bearing, insured e-CNY improves its competitiveness as a substitute for bank deposits and stablecoins, potentially dampening growth for private stablecoins and altering fiat liquidity dynamics in China. Policy clarity and infrastructure buildup (cross‑border pilots, custody, international ops center) reduce regulatory uncertainty — a constructive sign for orderly adoption but still unlikely to produce a bull market in tradable crypto tokens tied directly to the e-CNY itself.