The headquarters of the People's Bank of China in Beijing. [Photo by Shi Yan/China Daily]

China has issued new rules making it easier for foreign central banks, sovereign wealth funds and global financial organizations to access its interbank bond market, the latest step in the opening up of Asia's largest economy.

They will no longer need pre-approval to trade bonds, interest-rate swaps and conduct repurchase agreements, and can do so after filing a registration form, the People's Bank of China said in a statement posted on its website on Tuesday.

The change comes as China seeks to promote global use of the yuan to support its case for inclusion in the International Monetary Fund's basket of reserve currencies.

Increased foreign participation will help boost demand for local bonds as issuance by regional authorities surges.

"This is the most critical step in the yuan's internationalization," said Huang Wentao, an analyst at China Securities Co. "It will help further expand the interbank market and increase trading in the long run."

Local governments are set to issue 2.8 trillion yuan ($451 billion) of bonds this year. The nation is considering expanding a debt-swap program for provinces and cities, which seeks to convert high-cost existing debt maturing this year into low-yielding municipal bonds, according to industry sources. The existing 2 trillion yuan quota may be expanded to 3 trillion yuan, they said.

The opening of China's markets has the potential to boost global holdings of the nation's onshore bonds to as much as $500 billion in five years, according to JPMorgan Chase & Co estimates.