China has approved a plan to transition the digital yuan (e-CNY) to a new development model starting January 1, 2026. The shift includes an upgraded infrastructure, a revised governance framework, and updated circulation mechanisms. The initiative aims to strengthen resilience, improve risk control, and expand real-world use cases.
The People’s Bank of China released a policy blueprint summarizing 10 years of pilot programs and outlining the next phase in the development of a central bank digital currency. The document calls for the gradual, closely supervised expansion of the digital yuan as a core component of the country’s financial system.
The new plan formalizes a two-tier operating model:
- The People’s Bank of China sets the rules, technical standards, and core infrastructure.
- Commercial banks handle wallet issuance, customer service, security, and compliance with anti-money laundering requirements.
Under the new strategy, the digital yuan is effectively shifting from a “digital cash” model to a “digital deposit money” model. That means e-CNY will operate within the banking system, relying on commercial bank accounts, with technical support and regulatory oversight provided by the central bank.
Balances of the digital yuan held in bank wallets will be included in the required reserve framework and protected under the deposit insurance system. For nonbank payment institutions, the rules introduce 100% reserve backing for digital yuan holdings.
The plan also calls for a clear separation between governance and operations, the adoption of advanced supervisory technologies based on big data and artificial intelligence, and the development of domestic cryptographic and computing infrastructure. The updated approach is designed to preserve control over monetary circulation, prevent financial disintermediation, and reduce systemic risk.
According to People’s Bank of China Vice Governor Lu Lei, the guiding principle remains “resilience first,” with a focus on security, tightly controlled innovation, and serving the real economy.
By the end of November 2025, the digital yuan had reached large-scale adoption. Cumulative transaction volume totaled 3.48 billion payments, with an aggregate value of 16.7 trillion yuan. The number of individual wallets reached 230 million, while corporate wallets totaled 18.84 million. Under the multilateral cross-border settlement initiative Project mBridge, 4,047 transactions were processed for a combined value of 387.2 billion yuan, with the digital yuan accounting for about 95.3% of total transaction volume.
The digital yuan is already used across retail and wholesale trade, food services, tourism, education, healthcare, public services, social administration, rural development, investment activity, and international settlements. The currency supports both online and offline payments, programmable transactions powered by smart contracts, and a hybrid structure that combines account-based management with elements of distributed ledger technology.
Particular emphasis is placed on combining the strengths of traditional bank accounts with the efficiency of distributed ledger technologies. China continues to advance a hybrid model in which centralized oversight ensures stability and regulatory compliance, while blockchain-based solutions are deployed in complex use cases such as supply-chain finance, cross-border payments, and asset digitization. In September 2025, Shanghai opened a center dedicated to processing international transactions in digital yuan, supporting 24/7 settlement and the issuance of digital assets, including trade-related and carbon instruments.
