The yuan will be fully convertible in the Shanghai Free Trade Zone, a development that puts it in a better position to become a global currency.

In a set of rules published on Friday that provide details on how the 29 square kilometer trial zone in northeastern Shanghai will operate, the central government said that it will allow "interest-rate liberalization and the currency's cross-border use on the condition that risks are well controlled".

That means institutions and individuals will be able to freely trade the yuan for any foreign currency - and vice versa - whether for trade or investment.