The global race for central bank digital currencies (CBDCs) is entering a decisive phase. Lu Lei, a member of the Party Committee and deputy governor of the People’s Bank of China, has unveiled Beijing’s new strategic roadmap.
Through an ambitious ‘action plan’, he announced a profound transformation of the digital yuan (e-CNY) for 2026, aiming to combine banking robustness with blockchain agility. This follows his recent presentation of the strategy for transforming the e-CNY from ‘digital cash’ into ‘deposit currency’.
The timing of this announcement is pivotal for digital finance. Guided by the directives of the CPC Central Committee, Lu Lei outlined the framework that will shape the future of the digital yuan. As he emphasizes, the plan is not merely a technical update; it seeks to “accelerate the construction of a strong financial nation.”
A sober look at the challenges of digitalization
Lu Lei identifies the urgent need for change through a macroeconomic lens, reflecting on lessons learned since the 2008 crisis. He acknowledges that the rapid rise of digital assets and cryptocurrencies “reflects the digitisation and intelligence of the economy,” yet he also warns that they introduce risks, including “the parallel banking system and financial disintermediation.”
In response, the deputy governor asserts that China has already been a pioneer in this field. By the end of November 2025, e-CNY had facilitated 3.48 billion transactions totaling 16.7 trillion yuan.
Still, Lu Lei stresses that sustaining this model requires moving beyond the experimental stage and tackling the “common theoretical and practical challenges” that confront all central banks.
The major shift: from e-cash to Bank Deposit 2.0
The reform centers on the very nature of money itself. Once seen as digital cash, the e-CNY is now evolving into a more sophisticated financial instrument.
“The future digital yuan will be a modern digital means of payment and circulation, issued and circulated within the financial system,” Lu Lei explains. He adds that the new version will carry “the attributes of commercial bank commitments.”
In essence, this formalizes a transition to a ‘2.0’ model: digital yuan funds will now be treated as bank deposits, offering the same security guarantees and the added benefit of generating interest. This marks a significant departure from the cash model, which produces no return.
An innovative combination of blockchain and centralized management
Lu Lei’s remarks on technology are particularly revealing. While the debate often frames centralization (bank accounts) against decentralization (blockchain), he deliberately avoids pitting the two approaches against each other.
Highlighting the limitations of a purist vision, he observes:
“Currently, crypto-assets and stablecoins use value-based technologies as a fundamental approach, which has led to the widespread idea that only the application of blockchain constitutes a true digital currency.”
Instead, he advocates a hybrid architecture. “Ensuring compatibility between these two models is a major challenge,” he says, before detailing the specific advantages of distributed ledger technology (DLT) that he intends to harness.
“We should take advantage of blockchain, which, through its immutability and traceability, allows us to redefine the mechanism of trust. It offers major advantages for integrating capital flows in complex contexts, particularly for the transfer of property rights, transaction recording, and supply chain financing.”
Under the new plan, China will establish an international operational centre for the digital yuan in Shanghai. This centre will utilize a blockchain service platform to enable innovations such as online issuance, registration, custody, and settlement of securities, as well as carbon emission rights trading.
The adoption of blockchain technology is expected to reduce costs associated with establishing rights and trust in complex cross-border transactions.
Security and regulation: the ‘safeguards’ of the system
Lu Lei is unequivocal: innovation must never compromise security. He uses strong language to stress the importance of strengthening the system’s “breakwaters” and “ramparts.”
He insists on a strict separation of powers: the People’s Bank of China will form a digital RMB management committee to coordinate overall activities, while operational centres will handle technical oversight.
Regulatory nodes will also be integrated into the blockchain service platform, enabling real-time monitoring with big data and artificial intelligence.
Overall, Lu Lei’s 2026 strategy demonstrates a mature technological vision. By avoiding rigid technological dogmatism, the digital yuan emerges as a hybrid instrument capable of leveraging blockchain for complex transactions, while ensuring the stability of the banking system for everyday use. “Its primary objective is to serve the real economy,” he reminds us, highlighting China’s path toward modernized finance.
Source: Finance Sina
