Yuan banknotes
People’s Bank of China has been working on the idea of creating a digital currency since 2014 Reuters

The Chinese central bank is set to launch its own digital currency "as soon as possible" in a bid to boost financial transactions within the country and abroad. The People's Bank of China (PBoC) said a virtual currency would grant more control to policymakers, allowing them to closely monitor the money supply.

A research team at the PBoC has been working on the idea since 2014. The bank, however, revealed the idea only now, in a brief press statement on 20 January following a conference on digital currency.

"The team ... should set up a clearer strategic target for launching digital currencies, overcome the key technological barriers ... and aim for an early launch of the central bank's digital currencies," the PBoC said in the release. The federal bank did not mention anything about the technology which would be used in floating the cryptocurrency.

Besides easing transactions dependent now on circulation of paper money, the introduction of a cryptocurrency will help improve transparency and curb money laundering, the PBoC added. How the currency would be linked to the yuan was unclear.

China, which clocked its lowest economic growth in 25 years, has been looking for aggressive measures to inject more money into the country's financial system – including an offer of 400bn yuan ($60.8bn, £42.8bn) in short-term loans to commercial lenders.

Speaking about China's interest in jumping into digital currency, Zennon Kapron, managing director of Shanghai-based consulting firm Kapronasia, told Bloomberg: "They've recognised the opportunities the digital currencies have. If they did have something the government could monitor and use, that could fit into their longer-term plans."