Russia is preparing to raise $1bn in renminbi-denominated sovereign bonds in Moscow next year in a move that would potentially open a new source of foreign funding for its banks and businesses, shut out of capital markets in the US and Europe by sanctions.

The issuance, which would add to the international expansion of China’s currency, could lead to rouble-denominated bonds being issued in China and help promote similar cross-currency issuance by other big emerging markets, eating into the dominant role of the US dollar in global capital markets.

Denis Shulakov, head of capital markets at Gazprombank, which is providing informal assistance in preparing the issue, said the bond would set a benchmark interest rate in renminbi for the Russian Federation and, subsequently, for corporate issuers. “That’s the first objective,” he said.