Digital Renminbi 2.0: The Mechanism and Technological Innovation of "Interest-bearing Digital Currency"

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The People’s Bank of China has officially launched the historic transformation of the digital RMB from "cash-type 1.0" to "deposit money-type 2.0". This transformation, through the triad of institutional innovations—introducing an interest accrual mechanism, deposit insurance, and reserve management—upgrades the digital RMB from a simple payment tool to a financial asset with value storage functions, reshaping the underlying structure of digital finance.

According to Xinhua News Agency’s report on December 29, the People’s Bank of China issued the "Action Plan for Further Strengthening the Digital RMB Management Service System and Related Financial Infrastructure Construction", clearly stating that as of January 1, 2026, the new generation digital RMB measurement framework, management system, operating mechanism, and ecological system will be officially launched. PBOC Deputy Governor Lu Lei explicitly pointed out that digital RMB in customers' wallets now constitutes commercial banks’ liabilities and is a deposit form based on accounts.

Dongwu Securities, in its industry commentary report, emphasized that the core of this upgrade lies in "redefining liability attributes + incorporation into the macro framework on balance sheet", combined with a dual technological upgrade of "account system + token string + smart contracts", which pushes the digital RMB from a "pilot product" to "banks’ core liabilities and essential infrastructure". By the end of November 2025, digital RMB had accumulated 3.48 billion transactions totaling 16.7 trillion yuan, with more than 230 million individual wallets opened via the app.

Guotai Haitong Securities’ research report believes that this change in definition not only solves the user retention problem caused by the non-interest-bearing nature of digital RMB in the past, but also, by incorporating it into the reserve management system, closes the bank asset-liability logic loop, providing a high-frequency and low-loss digital base for RMB internationalization.

Institutional Innovation: From Payment Tool to Value Carrier

In his latest report, Dongwu Securities analyst Wang Zijie stressed that the core institutional innovation of version 2.0 is reflected in "redefining liability attributes + inclusion in the macro framework". The plan clearly states that the digital RMB balance in customers’ real-name wallets at commercial banks should be regarded as "account-based commercial bank liabilities", with wallet balances in bank operating institutions uniformly counted towards the reserve deposit base.

Guotai Haitong Securities arrived at a similar conclusion. Analysts Wu Wei, Yao Shijia, and Bao Yanxin noted in their report that by abolishing the "non-interest-bearing" policy for digital RMB, PBOC is channeling the liquidity from the liability side of commercial banks directly into the e-wallet system, marking the end of the digital cash era. Banking institutions are to pay interest on real-name wallet balances based on deposit rates as per self-regulatory agreements, and deposit insurance will provide the same security guarantee as deposits according to law. This allows digital RMB to evolve from a means of payment with mainly M0 characteristics into a "digital demand deposit" with value storage capability.

This mechanism significantly enhances users’ willingness to hold and use digital RMB, while providing banks with a manageable space for asset-liability management. Dongwu Securities believes that the new framework gives banks autonomy in operating digital RMB balances for asset and liability management, enabling them to cover operating costs through asset-side allocations, thus achieving a self-sustaining business model.

Technical Architecture: A Programmable Digital Payment Foundation

The Dongwu Securities report elaborates on three major technological innovations in the architecture—digital paths of "account system + token string + smart contracts".

On one hand, the wallet system is upgraded to be based on generalized accounts, maintaining regulatory compliance and low-friction interface with existing bank account rules; on the other hand, the "token string" form enables value transfer and offline circulation, and, with compatibility with distributed ledger technology (DLT), enhances verifiability and system resilience. At the same time, the digital RMB smart contract ecosystem service platform is upgraded to support the construction of an open-source smart contract ecosystem, driving the digital RMB from "electronic payment" toward "programmable digital payment".

The significance is: standardization at the account end provides regulatory consistency, clearing efficiency, and operational controllability for large-scale rollout; token string and DLT compatibility lay the foundation for cross-institution, cross-scenario, and even cross-border cooperation. Smart contracts embed business rules into capital flows, enabling condition-triggered and automatic verification in scenarios such as supply chain finance, supervision of prepaid funds, government subsidy distribution, and carbon incentive rewards, lowering the risk of misappropriation and compliance costs.

The "global single ledger" capability further strengthens risk control and statistical accuracy, improving the granularity of monetary statistics and liquidity management, and enhancing the precision of policy transmission and counter-cyclical regulation.

The Guotai Haitong Securities report also points out that, through "separation of supervision and operation", an oversight committee, and a self-regulatory industry office, the system reinforces balanced authority and responsibility, compliance, and anti-money-laundering governance efficiency—providing technical guarantees for auditability and penetrative regulation of distributed ledger and high concurrent transactions.

Cross-Border Applications: Reshaping the Global Settlement System

The Guotai Haitong Securities research team believes that the leap of the digital RMB to a "digital deposit currency" is reshaping the liquidity foundation and settlement efficiency of multilateral central bank digital currency bridges (mBridge). With the 2.0 version architecture officially defining digital RMB as commercial bank liabilities and incorporating it into the reserve framework, in cross-border use cases, it no longer simply serves as a non-interest payment medium, evolving into a high-quality liquid asset with interest-accruing properties and sovereign credit guarantees.

According to Xinhuanet, the digital RMB currently occupies an absolute leading position in currency bridge services, accounting for 95.3%. As of the end of November 2025, mBridge cross-border payments total 4047 transactions, equivalent to 387.2 billion yuan. The Guotai Haitong Securities report points out that, with the introduction of deposit insurance mechanisms, overseas institutions significantly reduce the risk costs of holding digital RMB, thus achieving more robust fund position management on the basis of "payment equals settlement".

The Dongwu Securities report validates the new architecture’s ability to support scale and cross-border scenarios. This architectural upgrade directly optimizes PVP (payment-versus-payment) efficiency for multi-currency settlement, greatly compressing the complicated clearing pathways found in traditional correspondent banking models.

Guotai Haitong emphasizes that the next-generation management system, by granting operating institutions asset-liability management rights, enables cross-border trade settlements to be conducted directly and in real time within the core banking account system, bypassing high intermediary fees and clearing delays inherent in the traditional model. This new way of capital formation driven by interest-bearing deposit money is breaking new ground in settlement path and credit fundamentals, and is becoming the core force disrupting the world’s traditional payment and settlement system.

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