The People's Bank of China (PBOC), the country's central bank, is expected to kick-start RMB QFII trials soon, allowing yuan funds raised in Hong Kong to be invested in the mainland's securities market, a senior official said Thursday.

QFII, short for Qualified Foreign Institutional Investors, is a mechanism that allows overseas investors, including fund managers, insurance companies, and securities companies, to make investments in China's stock markets.

The official, who spoke anonymously, said that during the trials, the total investment quota allowed to RMB QFII will be capped under 20 billion yuan (about 3.13 billion U.S. dollars), with 80 percent to be invested in the mainland's stock market. The option will first be open to domestic fund managers familiar with the A-share market and subsidiaries of securities companies in Hong Kong.

"Preparations have been completed and the trial is expected to be launched soon," the official said.

The central bank is also drafting a regulation allowing Hong Kong companies and foreign companies to make direct investments in the mainland with RMB.

The official said the PBOC is considering expanding the scale of issuing yuan bonds by domestic financial institutions as well as allowing domestic companies to issue yuan bonds in Hong Kong. The total issuance is expected to total 50 billion yuan this year, a step believed to further the development of Hong Kong's off-shore RMB market.