China's central bank has issued rules on banks' issuance of bonds to replenish capital on Tuesday.

Under the new rules, banks are encouraged to issue innovative loss-absorbing capital replenishment bonds. Also, those bonds could be write-down or convert to shares by triggering events. By the end of last month, the size of outstanding bond market debt in China came in at 75.1 trillion yuan. A number of regulations were introduced last year to rein in financial risks with mounting local debt. The central bank has pledged that more efforts will be introduced, such as to improve disposal of bond defaults, and unify rules on approval and information disclosure of corporate credit bond issuance.