China will launch an “action plan” on January 1 aimed at strengthening the management and operational framework of its digital currency, a senior central bank official said on Monday, signalling a renewed push to expand the use of the digital yuan.
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People’s Bank of China (PBoC) Deputy Governor Lu Lei said the digital yuan would serve as a modern means of payment and circulation issued and regulated within the country’s financial system. Writing in Financial News, a publication affiliated with the central bank, he said the next phase would involve rolling out a “new generation” structure for the currency.
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According to Lu, the new arrangement will include a comprehensive measurement framework, management system, operating mechanism and supporting ecosystem for the digital yuan, also known as e-CNY. The plan is designed to improve efficiency, oversight and public confidence in the state-backed digital currency.
A key feature of the action plan is that banks will begin paying interest on balances held in digital yuan wallets. Authorities hope the move will encourage wider adoption among consumers and businesses by making the digital currency more attractive compared to existing payment options.
The plan also proposes the establishment of an international digital yuan operations centre in Shanghai, China’s financial hub. The centre would support cross-border research, cooperation and potential future use of the digital yuan beyond domestic transactions.
Central banks worldwide have been exploring digital currencies in recent years, driven by rapid growth in online payments, lessons from the Covid-19 pandemic and the rise of private cryptocurrencies such as bitcoin. China has been among the earliest movers in this area, with the PBoC researching digital currency technology since 2014.
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Pilot programmes for the digital yuan have already been conducted in multiple Chinese cities, where residents can use e-CNY for retail purchases, transport and utility payments. While mobile payments via private platforms remain dominant, the digital yuan offers the central bank greater visibility and control over payment flows.
Officials see the digital yuan as a strategic tool to modernise China’s monetary system while reducing reliance on technology firms in the payments sector.