China not in hurry to develop digital currency: central bank governor

Zhou Xiaochuan (C), governor of the People's Bank of China (PBOC), Yi Gang (R), deputy governor of the PBOC and Pan Gongsheng, deputy governor of the PBOC and head of the State Administration of Foreign Exchange, attend a press conference on financial reform and development on the sidelines of the first session of the 13th National People's Congress in Beijing, capital of China, March 9, 2018. (Xinhua/Li Xin)

China is in no hurry in developing a digital currency, Zhou Xiaochuan, the country's central bank governor, said Friday.[Special coverage]

The development of a digital currency should be a prudent progress and excessive speculation must be avoided, Zhou said at a press conference on the sidelines of the annual session of the National People's Congress.

"We must prevent substantial and irreparable damages, especially when it comes to a large economy," he said, stressing that the financial sector should focus on serving the real economy.

The People's Bank of China, the central bank, has already set up a research institute for digital currency, and is now working with industry insiders to research into digital currency and electronic payment, according to Zhou.

The development of digital currency is "technologically inevitable," he said, noting that it is possible that the use of traditional backnotes and coins will gradually decrease and even diminish one day.

"We also pay high attention to the application of technologies like blockchain and distributed ledger," said Zhou.

The development process should both protect overall financial stability and protect the consumers, and the central bank will start a test program once the research project makes certain progress, he said.

Chinese authorities have ordered a ban on initial coin offerings last year and stopped direct trading between bitcoin and yuan as the rapidly expanding market spawned concerns over financial risks.

Technological development is a "dynamic" process, and the central bank is closely working with the market participants on regulation policies, said Zhou.