Western countries are working on digital currencies that do not pay interest, so as not to compete with commercial banks. However, China and its mBridge project, through which it has launched the digital renminbi, do allow users to earn returns.
Analysed by Consejeros Editorial Team
Until now, the debate surrounding the digital renminbi and the mBridge Project (the platform developed by China in collaboration with the Bank for International Settlements and the central banks of Thailand, the UAE and Hong Kong) has centred on whether China would manage to bypass the Western-controlled SWIFT system. The platform has already processed some $69,000 million in cross-border settlements, but the real revolution lies not only in the channel (mBridge), but the transformation of the e-CNY (the digital renminbi) itself, which took place in early 2026.
In the West, the Fed’s and the ECB’s greatest fear is known as banking disintermediation. If the ECB were to create a ‘digital euro’ and pay interest on it, you would withdraw your money from your local high-street bank (which could go bust) and deposit it with the Central Bank (which is 100 per cent safe). This would destroy the high-street banking sector, which would be left without the deposits needed to grant loans. That is why the West wants a digital euro that does not pay interest and has a maximum limit (for example, a cap of €3,000 per citizen).
China has not made the Central Bank pay interest, but has stated that the e-CNY – the digital renminbi – which you hold on your mobile is considered, for legal purposes, a liability of the commercial bank provided by the app. As a result, that e-CNY generates traditional deposit interest and is backed by the deposit guarantee scheme, whilst operating on the Central Bank’s hyper-controlled and traceable infrastructure.
Domestically, the e-CNY was a relative failure. Chinese citizens use Alipay (Ant Group) and WeChat Pay (Tencent), and the communist state was not pleased that the country’s transactional infrastructure was in the hands of two private tech giants. By allowing e-CNY wallets to pay returns (interest), Beijing is creating a massive incentive for citizens to migrate their funds from Big Tech to the new state-backed ecosystem, camouflaging it within the traditional banking system.
Nevertheless, it is unclear whether the digital renminbi will challenge the dollar’s global dominance. The dollar reigns supreme not only because the US is a powerful nation, but because anyone can buy, sell and withdraw US dollars whenever they wish without the government asking any questions. With the digital renminbi, for the time being, the opposite is true. However much a foreign bank on mBridge may earn interest on the e-CNY, if it cannot then freely move those funds out of China due to Beijing’s strict capital controls, no major sovereign wealth fund manager will want it as a reserve asset. It will serve to settle bilateral trade (buying oil or microchips), but it will not replace the dollar as a safe haven in the short term.
In any case, by becoming the software layer on which private deposits run, the Chinese state can see in real time how money moves through bank deposits, implement monetary policies with surgical precision (for example, providing a stimulus that expires if not spent within 30 days) and expand state control to unprecedented levels.
In short, China has moved beyond theory and launched the most significant economic experiment of the decade. The West is watching with a mixture of fascination and panic: if it succeeds, China will have rewritten the rules of modern money; if it fails and destabilises its banking system, it will have triggered its own digital bank run.
