China's digital yuan will function as commercial bank liabilities while retaining core monetary roles, including cross-border payments, central bank vice governor Lu Lei said.
Photo from Jiemian News
by XIN Yuan
China's central bank will roll out a next-generation framework for the digital yuan from Jan 1, 2026, under an official action plan that recasts the currency from a cash-like tool into an account-based form of digital money.
By the end of November 2025, the digital yuan had processed 3.48 billion transactions worth 16.7 trillion yuan, official data showed, with some 230 million individual wallets and 18.84 million corporate wallets opened through the official app.
China's cross-border central bank digital currency platform mBridge has handled 4,047 transactions with a total value of 387.2 billion yuan, with the digital yuan accounting for about 95.3% of transaction value.
In an article published on Dec 29 in Financial News, a newspaper affiliated with China's central bank, LU Lei, a vice governor of the People's Bank of China, said the move clarifies the digital yuan's transition "from digital cash to digital deposit money."
Lu said the digital yuan will be supported and regulated by the central bank but treated as a liability of commercial banks, issued and circulated through banks rather than directly by the central bank. He said the design preserves core monetary functions, including use as a unit of account, store of value and cross-border payment instrument.
The framework also brings digital yuan balances more firmly into existing monetary and regulatory systems. Balances held by bank operators will be included in the reserve requirement base, while non-bank payment institutions involved in digital yuan operations will be subject to a 100% reserve requirement.
Lu said the arrangements are intended to anchor the digital yuan within the existing banking system rather than replace current payment networks, while allowing new features such as programmable payments and smart contracts to be developed on top of bank accounts.
The central bank will establish a digital yuan management committee to coordinate oversight, while separate operating centers will run domestic and cross-border systems. Officials have said risk control and system stability will remain the priority as the digital currency's role expands.
