China's stance on digital currencies: e-CNY interest-free in 2025

Beijing’s strategy regarding digital currencies remains clear and consistent. The People’s Bank of China (PBOC) has reaffirmed that its digital legal tender, e-CNY, will continue to be interest-free for users. This decision, reiterated at the end of 2025, reflects China’s design philosophy to protect the stability of the traditional financial system while advancing payment digitization.

e-CNY is conceived as a digital equivalent of cash, not as an investment instrument. This distinction is fundamental to understanding the monetary policy implications adopted by the PBOC.

People’s Bank of China Maintains e-CNY as Non-Yielding Digital Money

The PBOC reaffirmed its commitment to the original design of e-CNY, where the absence of interest is a core feature, not a temporary obstacle. This stance by China’s central bank goes beyond a simple technical statement; it represents a deliberate strategy to differentiate itself from other approaches to digital currencies being developed globally.

China’s two-tier structure allows e-CNY to circulate through financial intermediaries, maintaining the crucial role of commercial banks in the economy. According to former PBOC governor Yi Gang, “e-CNY is not designed to generate returns, functioning as a digital form of cash aimed at improving transaction efficiency without undermining the traditional banking system.”

This clarity in monetary policy intent prevents unnecessary speculation about future changes to the e-CNY structure.

Central Bank Digital Currencies: Financial Protection Strategy

Globally, CBDCs face a dilemma: how to innovate without competing with bank deposits. China has chosen a conservative but effective path. Keeping e-CNY interest-free aligns China’s approach with best practices in international CBDCs, ensuring users do not see the digital currency as a substitute for savings in financial institutions.

Experts note that this decision minimizes disintermediation risks—the process where depositors withdraw funds from banks to hold them directly in digital central bank instruments. By protecting deposit flows into the banking system, the PBOC preserves commercial banks’ ability to extend credit and finance the real economy.

Impact on Financial System Stability

Reaffirming that e-CNY will not generate interest reassures Chinese financial institutions and maintains balance within the digital payment ecosystem. Financial markets do not anticipate major disruptions from this decision, considering it a policy continuity previously communicated.

Sector analysts observe that this measure aligns fully with China’s internal monetary policy objectives. Financial system stability is strengthened by avoiding incentives for users to prefer e-CNY balances over traditional deposits.

Pilot Expansion Without Structural Design Changes

While maintaining its interest policy, the PBOC continues to expand e-CNY pilot programs across multiple Chinese locations. This expansion reinforces the view that digital currency is a monetary policy tool aimed at improving payment infrastructure, not transforming the financial system architecture.

The absence of interest in e-CNY should not be seen as a limitation but as a design feature reflecting China’s mature approach to digital currencies. While other countries debate whether their CBDCs should generate yields, Beijing has already decided that transaction efficiency is the primary benefit a central bank digital currency should offer.