The People’s Bank of China (PBOC) will launch a new digital yuan framework on January 1, allowing commercial banks to pay interest on their digital yuan holdings to incentivize wider adoption of central bank digital currencies.
Lu Lei, deputy governor of the People’s Bank of China, wrote in an article published by the official newspaper Financial News that the so-called “action plan” will transform the digital yuan (e-CNY) from its current role as digital cash into a digital deposit currency.
Lei Jun wrote: “The future digital renminbi will be a modern digital payment and circulation method issued and circulated within the financial system. It will be provided with technical support and supervision by the central bank. It will have the liability attributes of commercial banks, be based on accounts, be compatible with distributed ledger technology, and have functions such as currency value measurement, value storage and cross-border payments.”
The plan also proposes to establish an international digital renminbi operation center in Shanghai.
The People’s Bank of China began a digital yuan initiative in 2014 under the name of the Digital Currency Electronic Payment or DCEP project to study the benefits of CBDC.
The central bank launched the digital yuan in April 2022. The central bank has since airdropped the electronic yuan as part of a pilot program to encourage adoption.
