"The future digital yuan will be a modern digital payment and circulation means issued and circulated within the financial system," People's Bank of China (PBoC) Deputy Governor Lu Lei wrote in Financial News, a media outlet under the central bank.

In the next step towards that goal, a "new generation" arrangement for digital yuan will be launched on January 1, Lu said, encompassing a "measurement framework, management system, operating mechanism and ecosystem".

The "action plan" will see banks pay interest on balances held by clients in digital yuan -- a move to incentivise broader adoption of the currency.

The plan also includes a proposal to establish an international digital yuan operations centre in the eastern financial hub of Shanghai, the report said.

Monetary authorities around the world have in recent years been exploring ways to digitalise currencies, propelled by a boom in online payments during the pandemic and the increased popularity of cryptocurrencies such as bitcoin.

The PBoC has been working on a digital currency since 2014 and has been testing the use of a "digital yuan" or "e-CNY" in various pilot programmes.

Consumers across the country already widely use mobile and online payments, but the digital yuan could allow the central bank -- rather than the big tech giants -- access to more data and control over payments.