CHINA'S central bank said yesterday that a long-awaited deposit insurance system is ready to be launched, as conditions are ripe and a consensus has been reached within the government.

The system will help "increase the flexibility of commercial banks in terms of financial business innovation and risk control," the People's Bank of China said in its 2013 financial stability report released yesterday.

However, the report does not provide details on the system, such as whether the deposit insurance institution will be a private or government-run entity.

Deposit insurance programs protect bank depositors by guaranteeing that a certain level of deposits can be paid, even if a bank goes bankrupt and cannot pay them.

In the report, the PBOC expressed confidence in the country's economic development, but also highlighted concerns about emerging problems.

"The country's economy is in a favorable condition to maintain sustainable and healthy development," it said, adding that the economic situation will be more complicated in 2013 and macro-economic regulation will face certain difficulties and challenges.

It warned about excess production capacity in some domestic sectors, as well as resource and environmental constraints and financial system risks.

The central bank vowed to improve the formation mechanism for the yuan exchange rate, increase its two-way fluctuation and maintain basic stability.