The People’s Bank of China (PBOC) will launch a new digital yuan framework on January 1 that will let commercial banks pay interest on holdings in one go to encourage wider adoption of the central bank’s digital currency.
The so-called “action plan” will shift the digital yuan (e-CNY) from its current role as digital cash to digital deposit money, Lu Lei, a deputy director of the People’s Bank of China, wrote in an article published by the state-run Financial News newspaper.
“The future digital yuan will be a modern digital means of payment and circulation issued and circulated within the financial system, with technical support and supervision provided by the central bank, possessing the characteristics of commercial banking obligations, based on accounts, compatible with distributed ledger technology, and having the functions of a measure of monetary value, store of value and cross-border payment,” Lei wrote.
The plan also proposes to establish an international digital yuan operations center in Shanghai.
The PBOC began working on the digital yuan program in 2014 under the name Digital Currency Electronic Payment, or DCEP project, to explore the benefits of CBDC.
The central bank launched the digital yuan in April 2022. Since then, it has dropped e-CNY as part of a pilot program to encourage adoption.
