China s Digital Yuan: A Step Towards Parity with Traditional Bank Deposits

In a significant move to enhance the adoption of the digital yuan, the Central Bank of China has announced that commercial banks will be allowed to pay interest on digital yuan deposits. This initiative is set to take effect on January 1st and is part of the Chinese Communist Party s 15th Five-Year Plan for Economic and Social Development, which emphasizes the steady development of the digital yuan.
Lu Lei, Vice Governor of the Bank of China, stated that
Banking institutions will calculate and pay interest on the balance of customers real-name digital RMB wallets
and will adhere to the self-discipline agreement on deposit interest rate pricing. He also mentioned that banks will be able to manage the asset-liability of digital wallet balances, ensuring that digital currency deposits receive the same protections as traditional deposits.
Despite the digital yuan s previous successes, gaining a foothold in the competitive Chinese market remains challenging due to existing preferred payment alternatives. This new measure aims to stimulate the use of the digital yuan by offering incentives similar to those of bank deposits. However, it is important to note that deposit interest rates in China are currently very low, having dropped to just 0.05 according to Bloomberg, which may limit the impact of this initiative.
Since November 2025, the digital yuan has processed over 3.48 billion transactions, with nearly 17 trillion yuan exchanged in these operations. This demonstrates a level of activity that the government hopes to build upon with the introduction of interest payments on digital deposits.