China's central bank is very close to launching its own digital currency after five years of research and development in the area, according to a senior official.

Mu Changchun, deputy director of the People's Bank of China's (PBOC) payments department, made the comments at a forum held Saturday in Yichun, Northeast China's Heilongjiang province.

The PBOC set up a research team in 2014 to explore the possibility of launching a digital currency to cut the costs of circulating traditional paper money and boost policymakers' control on the money supply. It has so far revealed few details of its plans.

Mu said the issuance of the digital currency will rely on a "two-tier" system in which both the central bank and financial institutions will be legitimate issuers.

He also said that the digital currency would not solely rely on blockchain technology as current blockchain technology would not be able to handle transaction volumes in China.