What is the impact of the interest-paying digital RMB on Hong Kong's digital finance?

Article by: Jason Jiang｜Web3.01

By the end of 2025, the People’s Bank of China issued the “Action Plan for Further Strengthening the Digital Renminbi Management Service System and Related Financial Infrastructure Construction,” marking the official transition of the digital renminbi from “Digital Cash 1.0” into the “Digital Deposit Currency 2.0” era.

The core change lies in that, starting January 1, 2026, the digital renminbi wallet balance will begin to accrue interest, and its legal attribute will shift from a direct liability of the central bank to a statutory currency with the liability attributes of commercial banks.

The Common Dilemmas of Global CBDCs and the Breakthrough of Digital Renminbi

Over 130 monetary authorities worldwide are exploring CBDC practices, generally caught in an irreconcilable paradox: how to introduce digital currency without undermining the foundations of the traditional banking system? The root cause is the concern over financial disintermediation—fearing that direct provision of safe and convenient digital legal tender by the central bank to the public could lead to a loss of deposits at commercial banks and disrupt credit creation functions.

Therefore, whether it is the European Central Bank’s discussion on setting holding limits for the digital euro or the Bank of Japan’s explicit warnings, their underlying logic is defensive. They strictly limit retail CBDC to non-interest-bearing digital cash (M0) to reduce its attractiveness compared to bank deposits and ensure financial stability. However, this often results in weak promotion of CBDC due to lack of incentives for users and banks, leading to a divergence between function and goal.

On this basis, the digital renminbi will become the world’s first CBDC that pays interest on ordinary user wallet balances. Digital Renminbi 2.0 reconstructs the monetary debt relationship through institutional innovation, attempting to internalize risks within the banking system and create new momentum. Its difference from other global retail CBDCs lies in:

This model transforms the digital renminbi from a potential tool that could disrupt banks’ “off-balance sheet” operations into a “within-balance sheet” bloodline deeply integrated into bank assets and liabilities.

Commercial banks have management and yield rights over digital renminbi deposits. Its promotion motivation shifts from “passive compliance” to “active operation,” forming a sustainable market-driven promotion mechanism. Meanwhile, clear deposit insurance guarantees eliminate user credit concerns.

This not only solves the incentive problem but also signifies that the digital renminbi is officially incorporated into the traditional monetary creation and regulation framework, providing the central bank with a new policy variable (digital renminbi interest rate) that can be directly applied. Its traceability also creates conditions for implementing precise structural monetary policies.

Defining a New Form: The “Hybrid” of CBDC and Tokenized Deposits

Because of its interest-bearing and banking operation features, Digital Renminbi 2.0 is somewhat similar to tokenized deposits promoted by commercial banks. The latter are digital certificates of bank deposits on blockchain (such as JPM Coin by JPMorgan), aimed at improving inter-institutional settlement efficiency. But this similarity is only superficial; there are fundamental differences in credit foundation and strategic level.

In fact, Digital Renminbi 2.0 creates a new hybrid form: it adopts the efficiency appearance of tokenized deposits but is fundamentally backed by full national sovereign currency credit.

This distinction is crucial. The credit of tokenized deposits is deeply tied to the assets and liabilities of the issuing bank, essentially an efficiency tool for existing financial intermediaries. In contrast, the credit foundation of Digital Renminbi 2.0 remains sovereign, aiming to build a foundational financial infrastructure supporting the future digital economy.

The report from Tsinghua University’s Institute of Financial Technology also points out that this kind of digital currency supported by national credit and with programmability provides a core support point for building a “blockchain + digital assets” dual-platform model.

Therefore, the upgrade of Digital Renminbi 2.0 is far more than an evolution of payment tools; it preemptively lays out a “settlement track” with the highest credit rating for the upcoming era of large-scale asset tokenization.

Interest-Paying Digital Renminbi Empowering Hong Kong’s Digital Financial Ecosystem

The strategic elevation of the digital renminbi has a unique and profound impact on Hong Kong, given its geopolitical and institutional context.

The key variable of paying interest completely changes the nature of the digital renminbi in cross-border and financial scenarios, evolving it from a “payment channel” into a “strategic asset,” thereby providing substantial empowerment for Hong Kong to build an “International Digital Asset Center” on multiple levels.

First, paying interest addresses the motivation for cross-border capital retention, directly strengthening Hong Kong’s offshore renminbi liquidity pool function.

In the cross-border payment network based on the multilateral central bank digital currency bridge (mBridge), non-interest-bearing digital currencies are merely circulation media, motivating enterprises to settle quickly to reduce capital occupation costs. After paying interest, the digital renminbi gains attributes competitive with Hong Kong’s offshore renminbi deposits. Multinational corporate treasury centers can treat it as an interest-earning liquidity management tool, allowing it to stay longer within Hong Kong’s compliant system.

Currently, digital renminbi accounts for over 95% of transactions on mBridge. The interest policy is expected to convert this flow advantage into a stock advantage, helping to expand and deepen Hong Kong’s offshore renminbi liquidity pool and consolidate its hub position.

Second, paying interest enhances the credit attractiveness of digital renminbi as a currency for issuing and settling tokenized assets in Hong Kong.

Hong Kong is actively promoting the tokenization of bonds and other assets. In DvP (delivery versus payment) settlement of such assets, the credit level of the settlement currency directly affects risk pricing and market acceptance. Digital renminbi, with interest and backed by national credit, far exceeds the credit level of any single bank’s tokenized deposits.

The Hong Kong Monetary Authority’s Ensemble project has explored interoperability of tokenized deposits, and Digital Renminbi 2.0 can serve as a higher-level settlement asset within this ecosystem. Its programmability allows for automated execution of bond coupon payments or trade finance conditions, greatly improving efficiency and reducing operational risks.

This provides a potential, superior underlying financial infrastructure option for Hong Kong to issue tokenized government green bonds and other high-end products.

Third, paying interest activates space for financial service innovation around digital renminbi, bringing synergy opportunities for Hong Kong’s fintech.

When digital renminbi becomes a bank-operable, interest-earning liability, services such as deposit management, wealth management, financing, and smart contract management will emerge around it.

Hong Kong’s common law system and active financial markets make it an ideal “sandbox” for testing such innovations. For example, developing compliant gateways connecting digital renminbi wallets with virtual asset platforms, or designing structured financial products based on its interest features.

This innovative synergy will position Hong Kong ahead in product design and rule-making in digital finance.

Fourth, paying interest deepens the differentiated strategic cooperation between digital renminbi and Hong Kong’s “Digital Hong Kong Dollar.”

Hong Kong has explicitly prioritized developing a wholesale “Digital Hong Kong Dollar,” focusing on large transactions among financial institutions and capital market applications. Digital Renminbi 2.0, with interest, can mainly serve cross-border retail payments, trade settlement, and related derivatives closely linked to the mainland’s real economy.

They are not substitutes but form a clear complementary pattern: Digital Hong Kong Dollar optimizes local wholesale financial efficiency, while digital renminbi deepens cross-border economic connectivity. This synergy enables Hong Kong to simultaneously strengthen its local financial infrastructure and cross-border bridge functions.