The People's Bank of China is advancing the digital yuan (e-CNY) on a broad front. Interest on balances, a doubling of authorized banks and a cross-border settlement network with more than USD 55 billion in volume mark the shift from a pilot project to strategic infrastructure.
The e-CNY is the digital currency of China's central bank, a so-called central bank digital currency (CBDC). Unlike a stablecoin or a crypto asset, it represents a direct claim against the PBOC and is therefore state-issued central bank money in digital form. Originally launched in 2019, it began with early pilots in Shenzhen, Suzhou and Beijing, followed by a gradual expansion from 2022 onward. By November 2025, the cumulative transaction volume had reached 16.7 trillion CNY (around 2.47 trillion USD). However, that equals only about 6% of a single UnionPay year of 279 trillion CNY. In domestic retail payments, Alipay and WeChat Pay still dominate unchallenged. Therefore, the strategic focus of the e-CNY lies on institutional and cross-border settlement, not on competing for the retail customer.
Interest on the digital yuan breaks with the global CBDC standard
Since 1 January 2026, the PBOC has paid interest on e-CNY balances. The rates match those for demand deposits, settled quarterly on the 20th of the last month of each quarter. Verified wallets in categories 1 to 3 are included, meaning private individuals and companies. Anonymous category 4 wallets, however, remain excluded. Worldwide, CBDCs had until now been considered non-interest-bearing in order to preserve the stability of the banking system. China is therefore deliberately breaking with an established consensus.
For the banks, the reform additionally shifts the incentive structure fundamentally. The e-CNY balances now count as balance-sheet deposit liabilities, meaning on-balance-sheet items. Furthermore, digital yuan deposit balances and account numbers will in future count toward the official assessment metrics for the institutions. Consequently, the banks for the first time have a direct business incentive to actively promote adoption instead of merely tolerating it. Thus, a tolerated pilot product becomes a balance-sheet-relevant deposit class that represents a measurable factor in the competition among institutions.
"The initiative transforms the role of the digital yuan from digital cash to digital deposit money." - Lu Lei, Deputy Governor, People's Bank of China
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PBOC doubles operator banks and tests smart contracts in the fiscal system
In April 2026, the central bank doubled the number of authorized operating banks to 22. The previous governance model provided for only nine to eleven operator banks. The step therefore carries structural weight, because it broadens the distribution base of the e-CNY at a single stroke. At the same time, the PBOC is considering a clearinghouse modeled on China UnionPay, which would settle e-CNY transactions between all operating banks. However, this plan has not yet been decided.
Through smart contracts, the authority is additionally testing a broad range of applications across the state apparatus. In the fiscal area this involves government spending and salary payments by local authorities. In the social area, it covers healthcare disbursements and the fight against health insurance fraud. Also, there are economy-related fields such as supply-chain financing, the tracking of green electricity consumption, as well as classic lottery payouts and prepaid cards. Notably, the degree of control stands out here, because local authorities have set numerical adoption targets. Therefore, the diffusion does not occur on a voluntary basis, but as a state-directed process. Specifically, this interlocking with the administrative apparatus gives the e-CNY a depth that goes beyond earlier demonstration projects.
mBridge accumulates USD 55 billion and operates without the BIS
mBridge is a cross-border CBDC settlement network that connects China, Hong Kong, Thailand, the United Arab Emirates and Saudi Arabia. From an initial pilot run in October 2022 with 160 transactions and USD 22 million, it later became a system with a cumulative USD 55.5 billion across more than 4,000 transactions. The e-CNY accounts for around 95% of the settled volume. The growth was therefore exponential. Saudi Arabia joined the network in September 2024 and extended its reach to one of the largest energy exporters in the region.
The Bank for International Settlements (BIS) left the project in October 2024. Officially, it cited the project's achieved maturity. Unofficially, however, concerns over possible sanctions evasion were in play. Notably, the exit did not slow the growth. Instead, the BIS launched its own venture, Project Agorá, together with Western central banks, which is regarded as a direct counterpart to mBridge. Thus, the multilateral umbrella of the BIS fell away ultimately without impairing the operational running of the network.
On an operational level, the Financial Commission Office in Shanghai is actively driving adoption by institutions. Banks are additionally developing compatible products for the Belt and Road routes, among them loans, letters of credit and trade bills. Moreover, the ASEAN states are regarded as the priority target region, through which a growing share of Chinese foreign trade runs.
China's CBDC strategy meets Washington's stablecoin course
Washington is pursuing the opposite path. President Trump promotes private stablecoins while at the same time prohibiting the domestic circulation of a state CBDC. Treasury Secretary Scott Bessent later reaffirmed this stance again, in May 2026. Behind it lies a clear geopolitical logic: dollar stablecoins are meant to extend the global reach of the dollar as a private liquidity amplifier, without requiring a state control infrastructure for it.
Therefore, two models stand opposed. China is betting on a programmable CBDC that lends itself as a control instrument, for example for targeted routing of transactions. The United States, by contrast, is betting on the network effect of private stablecoins. Xin Yan, CEO of the infrastructure provider Sign, summed up the contrast: China and the United States are the two engines of the world economy and both impose their own standards. China's digital yuan, he noted, is admittedly more compatible with the banking system, yet not foreigner-friendly.
The geopolitical pressure additionally reinforces this dynamic. China Securities Co. argues that the Iran conflict is accelerating the internationalization of the yuan, whose influence could spread from trade into geopolitics. Nevertheless, the scale remains decisive: at a cumulative 16.7 trillion CNY, the e-CNY reaches only around 6% of a single UnionPay year. The ambitions are real, but the actual penetration is still limited.
