'China's digital yuan needs to break down the domestic electronic payment giant 1st'

China's digital yuan needs to break down the domestic electronic payment giant first, Martin Chorzempa of the Peterson Institute for International Economic Policy said on the 17th.

"Many people say the digital yuan is the driving force behind the yuan's internationalization," said Cho Rzempa, a senior researcher at PIIE, in an interview with CNBC's Street Sign Asia. "I think we need to beat China's Alipay and WeChat Pay to deal a big blow to the U.S. dollar.

"At the core, it will be a central bank versus a large company," he said. "This will be quite interesting."

China's central bank is developing digital yuan and is expected to operate in a similar way to current payment apps. It recently conducted similar experiments in the major cities of Shenzhen and Suzhou and supplied $1.5 million as part of a digital currency test during the Lunar New Year.

Chorzempa said one of the main reasons China is spurring digital yuan is that it wants state-funded and controlled alternatives to existing giants such as Alibaba's Alipay and Tencent's WeChat Pay, which currently handles about 95 percent of digital payments.

Unlike most other major economies around the world, mobile payments, mainly through Alipay and WeChat Pay, have replaced cash as a major means of consumer payment over the past few years.

"The digital yuan is unprecedented in other countries, and it is very interesting to see it as the most advanced digital currency in the world," Chorzempa said.

Chorzempa said China's digital yuan has little in common with cryptocurrencies such as Bitcoin, known for its high price volatility.

The digital yuan has a very high level of safety and low risk, he said. We don`t have to worry about price fluctuations because they are designed to have the same value as the general yuan."

Brokerages that sell digital currencies in China are also expected to be "very safe and carefully regulated" as long as they are approved by the government, and "we expect the central bank's digital currencies to continue to expand around the world," Chorzempa said.