(Yicai) Dec. 30 -- China’s banks will be required to pay interest on e-yuan held in digital wallets from Jan. 1, in a move aimed at increasing public and market adoption of the digital currency.

Classified as M0 or physical currency in circulation, the e-yuan earned no interest previously, leaving holders exposed to inflation and the loss of time value. The new policy, announced yesterday by the central bank, will transform it into a deposit‑like instrument.

From next year, commercial banks will calculate and pay interest on customers’ real‑name digital yuan wallet balances based on their own deposit rates, a market expert told Yicai, adding that lenders have completed all the necessary system upgrades to bring interest‑bearing e-yuan onto their balance sheets

In terms of the regulation of non-bank payment institutions, the policy clarifies that digital yuan reserve funds must be managed using the same standards as customer reserve funds held by non‑bank payment institutions. Such institutions briefly paid interest on customer reserve funds between 2019 and 2022, but the policy expired at the end of 2022 and was not renewed, leaving reserve funds non-interest-bearing.

Research into the e-yuan began in 2014, and pilot programs have steadily expanded since. By the end of last month, it had been used in a total of 3.5 billion transactions worth more than CNY16.7 trillion (USD2.4 trillion). The number of personal e-yuan wallets had reached 230 million, while corporate wallets totaled 18.8 million, indicating broad market acceptance.

In cross-border payments, the multi-central bank digital currency bridge, known as mBridge, has delivered notable results, handling almost 4,050 trans-border payments worth the equivalent of CNY387.2 billion (USD55.3 billion), with the e-yuan accounting for over 95 percent of that.

Editor: Emmi Laine