According to Mu Changchun, the head of the research institute for digital currency at the People's Bank of China, the digital yuan will not compete with WeChat Pay and Alipay, according to a report in the South China Morning Post

"They don't belong to the same dimension. WeChat and Alipay are wallets, while the digital yuan is the money in the wallet," said Mu in the report.

However, the digital yuan is distributed through an app that some consumers may choose to use instead of private mobile wallets, according to Wang Leilei, a fintech consultant at the Shanghai-based financial industry consultancy Kapronasia. She said participants of a pilot run in Shenzhen were asked to download a specific app for the digital yuan.

The central bank is currently running its first digital yuan trials with designated institutions and merchants in China's southern tech hub of Shenzhen. The city just concluded the country's largest test of the sovereign digital currency this month after local authorities gave out 10 million yuan (US$1.5 million) to more than 47,500 people by lottery.

The digital yuan was awarded in the form of "red packets" each containing 200 yuan that could be spent in designated shops. A total of 1.9 million residents signed up to take part in the giveaway.