Lu Lei: Digital Renminbi should possess the liability attributes of commercial banks, be capable of paying interest, and enjoy deposit insurance

Recently, Lu Lei, Vice Governor of the People's Bank of China, stated in the Financial Times that the digital renminbi will transition from the era of digital cash to the era of digital deposit currency.

The future central bank digital renminbi is a digital payment method supported by technology and regulation from the central bank, while also having the liability attributes of commercial banks.

It will be compatible with distributed ledger technology and issued and circulated within the financial system. This digital currency will have the three fundamental functions of money: a measure of value, a store of value, and cross-border payments.

The reform promoted by the central bank aims to address common challenges in global digital currency development. This includes avoiding digital payment tools causing financial disintermediation and disrupting monetary policy guidance, as well as clarifying the operational rights and responsibilities of the central bank and commercial banks regarding digital currency, balancing centralized bank account management with blockchain decentralization features.

According to the "Action Plan for Further Strengthening the Digital Renminbi Management Service System and Related Financial Infrastructure Construction" issued by the central bank, it will officially start implementation on January 1, 2026.

The new plan, based on the "central bank-commercial bank" dual-layer operation framework, clarifies that customer balances within commercial bank digital wallets will be included in the deposit reserve base, and interest can be paid on real-name wallet balances, with the same protection as deposit insurance.

Lu Lei emphasized that the future business and technical model choices for the digital renminbi will adhere to the fundamental goal of meeting the needs of the real economy, and will adopt a principle of inclusive acceptance and cautious selection regarding the development of account-based and value-based digital currencies.

In summary, the upgrade of the digital renminbi from "digital cash" to "digital deposit currency" signifies that the digital renminbi is evolving from a payment tool into a more comprehensive, deeply integrated digital currency with the banking system, aimed at serving the real economy and financial stability.