China is set to usher in a new era for its digital currency, the e-CNY, by reclassifying it as "digital deposit money" from January 1, 2026. This strategic shift aims to expand its usage scenarios and reinforce China’s leadership in central bank digital currency (CBDC) development.

• The e-CNY will transition from a digital cash model (M0) to an interest-bearing “digital deposit money” model (M1), allowing it to function as an account-based digital payment instrument and bear interest.
• People’s Bank of China Vice-Governor Lu Lei announced this change, indicating it will strengthen the management framework and financial infrastructure for the digital renminbi.
• This redefinition addresses previous constraints, making the e-CNY more suitable for cross-border payments by eliminating the need for conversion from cash to deposits, which previously incurred additional costs and fees.