China's Digital Yuan Holdings to Earn Interest Under New PBOC Framework
The People's Bank of China (PBOC) is set to implement a new framework on January 1 that will allow commercial banks to pay interest on clients' e-CNY holdings.
This development shifts the digital yuan (e-CNY) from functioning solely as digital cash to operating as digital deposit money, with e-CNY being treated as a bank liability based on accounts.
An international digital yuan operations centre has been proposed in Shanghai to enhance the currency's global reach.
The plan, described as an "action plan," was attributed to Lu Lei, deputy governor of the PBOC, in Financial News.
China's central bank began the digital yuan program in 2014 under the name DCEP and officially launched the e-CNY in April 2022, initially rolling out a pilot program that included e-CNY airdrops.
Looking ahead, the e-CNY is envisioned as a modern digital payment and circulation method within the financial system. It will remain under central-bank supervision, be compatible with distributed ledger technology, and serve multiple functions such as monetary value, store of value, and cross-border payment.
