Zhou Xiaochuan's announcement came on the sidelines of the annual session of the National People's Congress, the country's top legislature.

The latest stage in China's financial reforms will see a move in July to scrap the floor limit for bank lending rates.

Additionally, December will see the release of a pilot guideline for piloting negotiable deposite certificates on the interbank markets.

The competition posed by Internet finance on traditional banks has been propelling the reform process.

Some Internet financial institutions have already offered annual interest rates of nearly 6 percent compared to the 3.3 percent ceiling allowed for brick-and-mortar banks.

Zhou Xiaochuan, Governor of China's Central Bank

"There is a driving force in the market that promotes the liberalization of interest rate. Newly emergent businesses and modes of operations will push forward the process. The deposit rate will be liberalized and it should be the last step of interest rate liberalization. Many other interest rates have already been liberalized and the liberalization of the deposit rate is surely in the plan. In my view, it will be realized in one or two years."

Zhou Xiaochuan, governor of China's central bank, and four other senior financial officials give a press conference for the second session of China's 12th National People's Congress (NPC) on the financial reform in Beijing, capital of China, March 11, 2014. [Photo: Chinanews.com]

Zhou's comments came after a government work report said last week that the country is to establish a deposit insurance system this year, the last and most important step of interest rate liberalization.

The steps aim to increase the role of the market in the nation's financial system.

Meanwhile, Zhou added that the internationalisation of the Chinese RMB still has a long way to go.

"We have a lot of homeworks to do before the internationalisation of Chinese RMB. In the past we have been focusing on removing regulatory barriers, but we still have to promote the RMB's exchangability as an investment currency. After all, we can not control the speed or tempo on this issue."

He stressed that fostering cross-border use of the currency and opening up the capital account.

In response to questions about the recent depreciation in the value of the yuan, Zhou responded that it was a sign of the growing role of market forces in the economy.

He added that current movements represent a short-term trend that does not warrant panic.

Currently, the yuan is convertible for trade purposes under the current account, while the capital account, which covers portfolio investment and borrowing, is still largely State controlled.

According to global transaction services organization SWIFT, the RMB overtook the Swiss franc to become the seventh most-used currency for payments worldwide in January.

It accounts for 1.39-percent of all global payments, compared to the 38.7 percent accounted for by the US dollar.