Published on 5/30/2026
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Last update: 12:31 (Mecca time)
Several sources reported that the Chinese central bank is making efforts to increase the use of the digital yuan inside and outside the country, which puts Beijing on a different path than the United States of America towards the future of cryptocurrencies or digital currencies.
Reuters reported that the People’s Bank of China (the central bank) provided behind-the-scenes incentives and guidance to local banks to expand their trading of the digital yuan, in areas ranging from the field of drawing lottery prizes to fees related to the consumption of electricity produced by clean energy, as well as budget-related spending.
The sources said that pressure is being put on Chinese banks to promote the use of the digital yuan in cross-border transactions, especially along the Belt and Road Initiative routes, as lenders race to develop methods including loans, letters of credit and bonds.
All sources requested that their names not be revealed because they are not authorized to speak to the media, while the People’s Bank of China did not respond to Reuters’ request for comment.
Lu Li, Deputy Governor of the People’s Bank of China, wrote an article published in December 2025 in the Financial News newspaper of the Chinese Central Bank that “the future of the digital yuan will be based on modern digital payments and means of trading and issuance within the financial system.”
New arrangements
The next steps – according to the Chinese official’s article – require launching arrangements for a “new generation” of the digital yuan that includes “an evaluation framework, a management system, an operating mechanism, and an integrated system.”
The business plan stipulates that banks will pay interest on customer balances in the digital yuan, and establish an international operations center for the digital yuan in Shanghai.
China’s policy towards the digital yuan contrasts with the United States’ approach, as President Donald Trump has embraced stable cryptocurrencies (pegged to the dollar) and banned the trading of central bank digital currencies domestically.
Some sources in the sector said that one of the reasons for Beijing’s move is the desire to reduce its dependence on a global payments system dominated by Western institutions and based on the dollar as the global reserve currency.
One of the sources in the sector explained that the digital yuan is a technological pillar that helps ensure that China’s international trade flows continue uninterrupted during any future geopolitical shocks, a concern confirmed by external instability related to the US-Israeli war on Iran.
According to the latest official data, cumulative transactions in the digital yuan amounted to 16.7 trillion yuan (about 2.47 trillion dollars) until last November since it was first introduced in 2019, compared to 279 trillion yuan ($41.2 billion) in Chinese UnionPay bank card transactions in 2025 alone.
Digital yuan accounts
Earlier this year, China began allowing banks to pay interest on holdings of digital yuan accounts, in a major shift in Beijing’s financial policy. Last April, the authorities more than doubled the number of banks licensed to pay these interests, to 22 banks.
An informed source in the financial technology sector that provides technology services to banks said that deposit balances and account numbers in the digital yuan have now become major indicators in evaluating banks, explaining that the goal is to build a critical mass and a system that attracts broader participation.
To boost domestic use, China’s central bank is testing applications that use “smart contracts”, which are embedded programs that carry out automatic payments when pre-defined conditions are met.
Government spending programs
Sources in the sector said that the pilot projects include the withdrawal of lottery funds, prepaid cards, government fiscal spending, and supply chain financing.
The sources said that the authorities are also testing the use of the digital yuan to reduce medical insurance fraud and track green electricity consumption, taking advantage of its ability to accurately track money flows.
A source at an electronic payment company in China said that local governments in the country have set target digital indicators to adopt the use of the digital yuan, and are currently testing experimental internal use cases, including paying salaries and disbursing health care benefits.
Informed sources reported that the People’s Bank of China is also considering establishing a clearing house (a central financial intermediary between the seller and the buyer to ensure the completion of financial and commercial transactions) similar to the China UnionPay network to process digital yuan transactions between all banks and improve efficiency.
