China is preparing a major shift in the institutional role of its central bank digital currency. From January 1, 2026, the digital yuan will move beyond a cash-like instrument toward a form of digital deposit money, according to an announcement by the country’s central bank.
The change marks a deepening integration of the e-CNY into China’s banking system. Under a new management framework, balances held in digital yuan wallets at commercial banks will be treated as bank deposit liabilities, aligning the digital currency more closely with traditional deposit money.
According to the Xinhua News Agency, the upgraded framework introduces new measurement standards, management systems, operational mechanisms, and a broader ecosystem for the digital yuan. The reform builds on more than a decade of pilot programmes that have tested the e-CNY across retail payments, public services, and cross-border settlement scenarios, both online and offline.
A central element of the reform is the requirement for commercial banks to pay interest on digital yuan wallet balances in line with existing deposit rate regulations. These balances will also be covered by deposit insurance, giving users protections equivalent to those applied to ordinary bank deposits. Banks must integrate digital yuan wallets into their standard asset-liability management practices.
The central bank will also adjust its monetary policy framework. Digital yuan balances held at authorised commercial banks will count toward reserve requirement calculations, while non-bank payment institutions will be required to hold 100 percent reserves against the digital yuan they manage. This reinforces the role of banks as the primary intermediaries for retail digital currency use, while limiting risk at non-bank platforms.
The announcement comes as digital yuan usage has already reached significant scale. By the end of November 2025, China had recorded 3.48 billion cumulative digital yuan transactions with a total value of 16.7 trillion yuan, or around $2.37 trillion.
For policymakers outside China, the move will be closely watched. By combining CBDC features with deposit-like treatment, China is charting a path that differs from more cash-oriented models under discussion elsewhere, including in Europe. How this shift affects consumer behaviour, bank funding, and competition in payments will become clearer once the new framework takes effect in 2026.