China lets banks pay interest on digital yuan wallets from January 2026

China's central bank will allow banks to pay interest on digital yuan wallets starting January 1, 2026. This development positions the e-CNY as a deposit-like asset, particularly significant as the US moves to ban CBDCs. The introduction of interest on digital yuan is expected to create new avenues for investors and consumers, potentially impacting China's financial market significantly. This decision may accelerate the digitization of the domestic economy and strengthen China's position within the international financial system. For banks, offering interest could enhance the appeal of the digital yuan, encouraging its adoption among users.