What happened in China On January 1, 2026, the People's Bank of China formally reclassified the e-CNY — China's central bank digital currency — from a digital cash substitute into an interest-bearing deposit. Banks in China were permitted, from that same date, to pay interest on digital yuan balances held in verified wallets. The PBOC announced an upgraded management framework to accompany this shift, with phased scaling, enhanced supervision, and cross-border pilots scheduled to follow. As of March 2026, China is also expected to allow a dozen additional banks to handle the digital yuan, according to people with knowledge of the plans. On paper, this looked like Beijing turning up the competitive heat on Alipay and WeChat Pay — giving the state-backed currency the yield that private wallets couldn't easily match. In practice, the PBOC stated explicitly that the reclassification would mean "no difference" in how banks and fintech…