Digital Renminbi undergoes its biggest upgrade in ten years, officially entering the interest-earning era tomorrow

Starting from January 1, 2026, a seemingly small but profoundly significant change will occur: the six major banks will begin paying interest on the balances of the digital renminbi real-name wallets, with the interest rate based on each bank’s posted current deposit rate. This marks the official upgrade of the digital renminbi from “digital cash” to “digital deposit currency,” representing a systemic enhancement after ten years of pilot programs.

Specifics of the Policy Upgrade

According to the “Action Plan for Further Strengthening the Digital Renminbi Management Service System and Related Financial Infrastructure Construction,” disclosed by Vice Governor Lu Lei of the People’s Bank of China, this upgrade involves the following core changes:

What the Transition from M0 to M1 Means

Payment tools upgraded to deposit tools

Previously, digital renminbi was mainly positioned as M0 (cash), emphasizing payment functionality. With this upgrade, it now possesses the attributes of M1 (demand deposits), allowing users to earn interest. Although at a 0.05% rate, 10,000 yuan would earn only 5 yuan in interest over a year, the significance of this shift lies not in the amount of interest but in the evolution of digital renminbi from a pure payment tool to an all-in-one wallet that combines “payment + storage + wealth management.”

Repositioning within the financial system

The new regulation clearly designates commercial banks as the operational responsible entities for digital renminbi, with wallet balances included in the reserve requirement base. This means digital renminbi is officially integrated into the traditional financial system framework, enhancing financial stability and preventing disintermediation risks. Non-bank payment institutions will be required to hold 100% reserves, further strengthening the safety of funds.

Three Dimensions of Practical Impact

Incentives for users

Vice Governor Lu Lei emphasized that “the interest-earning capability of accounts is a key factor in motivating users and entities for monetary innovation.” Although the interest is modest, moving from 0 to 0.05% represents a qualitative change. This will encourage more people to open and use digital renminbi real-name wallets, increasing its penetration rate.

Attractiveness for banks

Once digital renminbi wallets become interest-bearing accounts, banks will gain a more stable liability source. This can help banks optimize their liability structures and attract and retain customers through more professionalized services.

Promotion of cross-border payments

According to information, digital renminbi can seamlessly connect to global payment systems, combined with the “Multilateral Central Bank Digital Currency Bridge,” potentially improving cross-border payment efficiency. The addition of interest-earning features further enhances the appeal of digital renminbi to international users.

Market Response and Future Outlook

According to the latest data, as of the end of November 2025, digital renminbi had processed a total of 3.48 billion transactions, with a cumulative transaction volume of 16.7 trillion yuan, and 230 million personal wallets opened. This base indicates that digital renminbi has achieved a considerable market scale.

Market observers suggest that this upgrade could be a turning point for the rapid popularization of digital renminbi. On one hand, the interest-earning feature increases user stickiness; on the other hand, its formal inclusion into the financial system’s regulated management alleviates some user concerns. It is expected that the penetration rate of digital renminbi will further increase in 2026.

It is also worth noting that some believe the regulatory upgrade of digital renminbi might impose constraints on certain scenarios. However, in the long term, such regulation is necessary for building user trust and promoting large-scale adoption.

Summary

The upgrade of digital renminbi from “digital cash” to “digital deposit currency” is not only a functional expansion but also a shift in positioning. Although an annual interest rate of 0.05% may seem insignificant, it signifies a direction: digital renminbi is becoming a true financial tool rather than merely a payment instrument. This systemic breakthrough after ten years of pilot programs is expected to be a key step in promoting large-scale application of digital renminbi. For users, banks, and the entire financial system, this is a milestone worth paying close attention to.