China to Pay Interest on Digital Yuan From 2026 in Challenge to Alipay, WeChat Pay

China's central bank will allow commercial banks to pay interest on digital yuan holdings starting January 2026, marking a significant escalation in its campaign to promote sovereign digital currency over private payment platforms. The People's Bank of China (PBOC) unveiled a sweeping framework that treats e-CNY balances as deposits—eligible for insurance protections and interest accrual under existing banking regulations.

The MOVE directly pits the state-backed digital currency against Alipay and WeChat Pay, which dominate China's $17 trillion mobile payment market. Deputy Governor Lu Lei framed the policy as advancing financial inclusion: "e-CNY is designed to function as money—for saving, spending, and eventually cross-border use."

Technical upgrades to the digital yuan infrastructure will roll out through 2025, with full implementation scheduled for 2026. Market observers note the timing coincides with China's 14th Five-Year Plan objectives for digital economy dominance.