China's digital yuan was not developed to replace the dominant status of the U.S. dollar but to meet the needs in the internet era, especially for retailing payment, Zhou Xiaochuan, former head of China's central bank, said at Tsinghua People's Bank of China School of Finance (PBCSF) Global Finance Forum in Beijing on Saturday.

The digital yuan, also known as e-CNY or digital currency electronic payment (DCEP), is not meant to replace the U.S. dollar as an international reserve and payment currency, Zhou said, dismissing claims made by some foreign media.

He said the digital yuan should not be closely linked to yuan's internationalization, which depends more on policy decisions and opening up instead of technical factors.

Zhou also denied the claim that China's central bank wants to replace third-party payment with the digital yuan.

According to Zhou, the People's Bank of China organized the research and development of the digital yuan. But major commercial banks, telecom companies and several major third-party payment firms joined based on their achievements.

"We are on the same boat," he said. "Not in a conflict about replacement.”

China is likely to be the first country to issue a central bank digital currency to include more people in the rapidly developing digital economy.

Tests and trials have been made in cities, including Suzhou, Shenzhen and Beijing, since February. In April, a cross-border use test was made between the Chinese mainland and Hong Kong.

Other countries, including Canada and Japan, have also been gearing up preparations for digital currencies.

The first effort in the U.S. was announced on May 3 by the nonprofit Digital Dollar Project, which plans to launch five pilot programs over the next 12 months to test the potential use of the digital U.S. dollar, Reuters reported.