China's central bank said on Aug. 12 that it had allowed a division of the World Bank to issue bonds denominated in special drawing rights (SDR) in the country's interbank bond market.

The International Bank for Reconstruction and Development was approved to issue bonds worth 2 billion SDR (2.79 billion U.S. dollars), according to the People's Bank of China website. Chinese yuan will be the currency of settlement.

The first batch will be put on the market "soon". Interbank debt denominated in SDRs will diversify investment portfolios both in China and abroad.

The inclusion of yuan in the SDR will take effect in October.

Industrial and Commercial Bank of China (ICBC), the country's largest bank by market value, will be the lead underwriter for the issue.

These will be the first bonds denominated in the SDR since 1981.