Britain on Friday said it would be the first country outside China to issue yuan-denominated bonds, as London seeks to become a Western hub for trading in the Chinese currency.
The UK Treasury said the government plans to issue the bond in the coming weeks, subject to market conditions, without giving an exact amount or other details.
"This will be the first non-Chinese issuance of sovereign RMB (yuan) debt and will be used to finance Britain's reserves," it said in a statement.
"Up to now, Britain has only held reserves in US dollars, euros, yen and Canadian dollars, so today's announcement signals the RMB's potential as a future reserve currency."
British politicians have been scrambling to make London China's Western financial hub as Beijing loosens its tight regulations on international trading in the yuan.
Last year the yuan overtook the euro as the world's second-largest trade currency after the dollar, and analysts predict its role is set to grow as China's economy, already the world's second-largest, expands.
In response, British authorities have embarked on a charm offensive to attract Chinese capital in the City of London, with yuan volumes more than doubling in the year to July 2014.