China to Pay Interest on Digital Yuan from Jan 1 for Wider Adoption

• China will begin paying interest on its official digital currency, e-CNY, from January 1 to boost public adoption after a decade of trials.
• Commercial banks operating digital yuan wallets will offer interest, placing e-CNY on par with conventional bank deposits in legal status.
• The move comes as Chinese households save more and loan growth slows, leaving banks with excess deposits and low-yielding interest rates (0.05% on demand deposits).
• Despite pilot programs across half of mainland China, e-CNY faces limited mass acceptance due to competition from WeChat Pay and Alipay.
• The PBOC is building out the digital yuan ecosystem, including a Shanghai operations center, while the Communist Party calls for its "steady development."

Why It Matters: China aims to boost digital yuan adoption by offering interest, aligning it with traditional bank deposits.