China is fully prepared for a looming currency war should it, though "avoidable," really happen, said deputy governor of China's central bank Yi Gang late Friday.

Yi, vice governor of the People's Bank of China, made the comment amid widespread concerns that the world's major economies would drive down their units to gain a trade advantage through monetary easing policies.

Since Japanese Prime Minister Shinzo Abe took his post, the yen has fallen by 20 percent as a result of bold inflationary moves. The yen has been veering between 92.30 and 94.30 versus the U.S. dollar over the past couple of weeks, the lowest in more than a year.

A currency war could be avoided, Yi said, if policymakers in major countries observed the consensus, reached at the recent G20 meeting, that monetary policy should primarily serve as a tool for domestic economy.

G20 members promised that they would not wage a currency war, but none have shown signs of scaling back monetary easing that has injected a flood of cash into global markets. They worry that removing the stimulus will plunge their economies into another recession.

"China is fully prepared," Yi said. "In terms of both monetary policies and other mechanism arrangement, China will take into full account the quantitative easing policies implemented by central banks of foreign countries."