Many people may not think about how money itself is changing, but digital forms of currency are quietly reshaping how countries handle payments and finance. In China, where mobile wallets like Alipay and WeChat Pay have already replaced cash for millions, the government is now preparing to take its own digital currency to the next level with an action plan. China is calling this plan the digital yuan management action plan, and it is meant to guide how China’s digital currency will be used beginning on January 1, 2026.
The digital yuan is China’s official digital money made by the People’s Bank of China (PBOC). It is not like Bitcoin or other cryptocurrencies, it is the same legal money you use every day, just in digital form.
For many years, China has tested the digital yuan in parts of the country, but this action plan is the first time there is a clear official rule book for how it should work across the whole financial system.
Deputy Governor Lu Lei said the digital yuan will have “the functions of a measure of monetary value, a store of value, and cross-border payment,” while stressing that the People’s Bank of China will provide the technical support and supervision needed to keep the system stable. In simple terms, the new rules explain how the digital yuan will be created, how it moves through the financial system, and who is responsible for overseeing it. The central bank will control issuance and set the standards, while commercial banks and payment institutions will handle user wallets and daily transactions.
The rules also define how the digital yuan fits into China’s existing banking system, how risks are monitored, and how the currency could eventually be used for payments beyond China’s borders. Together, this framework is meant to make the digital yuan function like cash, but in a fully digital and regulated form.
The action plan also confirms that the digital yuan will run on a two-tier system. In this setup, the central bank issues the digital yuan and oversees the system, while commercial banks manage digital yuan wallets for the public and handle day-to-day services like payments and account management. Under the new rules, banks are allowed to pay interest on digital yuan balances held in these wallets. This could make the digital yuan more appealing than physical cash, which does not earn interest, while still keeping it under full central bank supervision.
China has made big moves in digital money before, but the road has not always been smooth. Early testing showed that many people did not switch from their favourite mobile payment apps to the digital yuan. At the same time, China’s attempt to use the digital yuan in cross‑border payment networks faced international pushback, especially from global financial leaders who worried the system could be used to avoid sanctions or upset the dominance of the U.S. dollar in world trade.
Louis Eriakha
China’s move in a global context
With this digital yuan program, China inserts itself as the leader among a growing list of countries working on similar ideas.
China has tested the digital yuan for years in many cities, built it into existing banks and payment systems, and set clear rules for how it is issued, managed and supervised. In many other countries, digital money plans are still at the discussion or at an early stage.
In the United States, the Federal Reserve has been looking into creating a digital dollar for several years. They have shared papers and talked to banks and other groups, but they are being careful. They want to make sure a digital dollar would be safe, private, and work well with regular banks. There is no official start date yet, and they are still studying how it would work.
In the European Union, the European Central Bank is also studying a digital euro. They are testing how it could be private, secure, and fair for everyone without causing problems for normal payment systems. But, like the U.S., they have not decided when or if it will officially launch.
Some countries, like the Bahamas, and Nigeria have already started using their own digital money in small ways.
In Nigeria, fewer than 0.5% of wallets were active one year after launch, and most users never made transactions with the digital currency. This shows that even when a central bank issues digital money, getting people to use it regularly can be difficult.
On the other hand, the Bahamas’ Sand Dollar uses distributed ledger technology and is pegged to the US dollar. It was the first officially launched CBDC, but adoption has been limited. Only about 0.1% of the country’s total currency in circulation is in the form of the Sand Dollar, and very few merchants currently accept it for payments.
China’s new plan for the digital yuan shows it is moving from testing to real use. By explaining how the digital money will be managed, watched, and used every day, China is showing that it wants the digital yuan to be used inside the country and even for international payments. This could help more shops, banks, and people start using it, even those who were unsure before.
Kelechi Edeh
