digital currency Photo: VCG

China should steadily advance the development of its legal digital currency to leap ahead in the global digital economic competition, an industry representative said on Monday. 

Li Lihui, former president of the Bank of China, said at a digital currency seminar in Beijing that it is necessary for the country to accelerate the design of a China-led legal digital currency as the competition heats up, according to media reports on Monday.

In 2020, the People's Bank of China (PBC), the central bank, will continue to advance the design of its legal digital currency. It has basically completed the top-level design and standard setting of this digital currency, reports said, citing Fan Yifei, deputy governor of the PBC.

A competition mechanism could be introduced when China launches its digital currency, cnstock.com reported, citing Li. It may not rely solely on blockchain technology but would test different digital technologies in parallel to decide which fits the digital currency better, since the current blockchain alone could not meet mass consumer demand, he noted.

There may be a transition period when China launches its legal digital currency, Li said. China may retain the current market operations and monetary policy transmission mechanism while gradually replacing the traditional currency and payment systems with the digital one.

Digital currency is of great significance and has broad prospects in China, Dong Dengxin, director of the Finance and Securities Institute at Wuhan University of Science and Technology, told the Global Times on Monday.

"The digital currency has many advantages over traditional currencies in encryption, anti-money laundering and prevention of financial fraud," he said. 

The wide acceptance of mobile payments and internet coverage have established the foundation for the digital currency, he added.

"I believe the digital currency has a bright future in China," he said.