China's PBOC Broadens Digital Yuan Push with Interest Payments, Cross-Border Focus

The People's Bank of China (PBOC) is accelerating the adoption of the digital yuan (e-CNY) through policy incentives and directives to banks, aiming to reduce reliance on the dollar-dominated global payments system, industry sources told Reuters on May 30, 2026. The move contrasts with the U.S. embrace of stablecoins and ban on central bank digital currencies. Banks can now pay interest on e-CNY deposits, turning the currency into an on-balance sheet liability and boosting lenders' incentive to promote it. The number of authorized operating banks doubled to 22 in April. Authorities are piloting smart contracts for lottery draws, fiscal spending, and medical insurance fraud prevention, while integrating e-CNY adoption into bank performance metrics. Cross-border efforts target Belt and Road Initiative routes, with banks racing to offer compatible loans and letters of credit. China is also urging use of the mBridge platform linking central banks in Hong Kong, Thailand, the UAE, and Saudi Arabia. Cumulative e-CNY transactions reached 16.7 trillion yuan ($2.47 trillion) since its 2019 debut, but remain a fraction of the 279 trillion yuan processed by China UnionPay in 2025. Limited overseas counterparty enthusiasm poses a key hurdle.