What is the e-CNY? China's Digital Yuan Explained

The e-CNY (Digital Currency Electronic Payment, DC/EP) is the central bank digital currency (CBDC) issued by the People's Bank of China (PBoC). Piloted from 2020 in cities such as Shenzhen, Suzhou, and Chengdu, it went nationwide in 2023 and is fully live in retail and government payments by 2026.

In January 2026 the PBoC reclassified e-CNY as part of the M1 monetary aggregate, allowing it to bear interest and making it the world's first interest-bearing retail CBDC. This is a major inflection point in the global CBDC debate, as central banks had historically avoided paying interest to prevent bank disintermediation.

The e-CNY uses a two-tier distribution model: the PBoC issues it to licensed commercial banks (ICBC, China Construction Bank, and others), which then distribute it to end users via official wallets. It supports offline NFC and device-to-device dual-offline payments.

China is also one of the most active participants in mBridge, the BIS Innovation Hub Hong Kong multi-CBDC project for wholesale cross-border settlement alongside Thailand, the UAE, and Saudi Arabia.

Public figures as of 2026 put e-CNY at more than 230 million open wallets and 22 licensed operators (state-owned banks, JV with local Visa/Mastercard issuers and platforms like WeChat Pay and Alipay). Cumulative volume exceeds 1.8 trillion yuan (~USD 250 bn) since pilot start, concentrated in government payments (subsidies, public-sector salaries, tax refunds) and retail in the pilot regions. The exit from pilot status coincides with tighter regulation on USD-denominated stablecoins and the consolidation of the Cross-Border Interbank Payment System (CIPS) as a wholesale rail running parallel to SWIFT.

The decision to remunerate e-CNY carries three geopolitical reads: (1) it makes the digital yuan more attractive in APAC trade vs USD stablecoins; (2) it forces the ECB, BoE and FOMC to assess whether the digital euro / digital pound / FedNow Plus should compete with interest; (3) it accelerates the FSB and BIS debate on the operational limit of the CBDC model without disintermediating commercial banks.