China's central bank digital currency (CBDC), the e-CNY, has undergone a fundamental redesign, shifting from a revolutionary digital cash model to a system that functions more like traditional bank deposits. According to analysis by Martin Chorzempa of the Peterson Institute for International Economics (PIIE), this late-2025 pivot significantly undermines narratives that the digital yuan poses a major threat to the U.S. dollar's global dominance.
The original vision for the e-CNY was a direct liability of the People's Bank of China, akin to digital cash. However, to protect the traditional banking system from potential deposit flight, China redesigned it. "Now e-CNY works like regular bank deposits instead," the analysis notes. When users hold e-CNY, the funds remain as liabilities on commercial banks' balance sheets, which can then lend them out—a stark departure from the pure CBDC model.
While the e-CNY now offers interest—a feature promoted by some analysts like those at Weiss Crypto—the rates are minimal, capped by government policy between 0.05% and 0.5% annually. This yields only about $50 per year on a $10,000 deposit, a return that pales in comparison to yields available on U.S. dollar-denominated stablecoins like USDC on platforms such as Coinbase.
Usage statistics further challenge the threat narrative. Although the e-CNY had processed 3.4 billion transactions worth $2.3 trillion by November 2025, this volume represents just 0.2% of China's total digital payment system. Dominant platforms like Alipay and WeChat Pay process roughly 1 quadrillion RMB per quarter. Cross-border usage via the mBridge platform remains negligible, with only about 4,047 transactions to date.
Chorzempa's conclusion is that China prioritized safeguarding its existing banking infrastructure over creating a disruptive new form of money. "The dollar remains dominant while e-CNY becomes just another form of regular banking dressed up with some new technology," the analysis states, downplaying the immediate competitive challenge to the U.S. dollar.
