China Development Bank, one of the country's three policy banks, and the Russian Direct Investment Fund (RDIF) announced on Tuesday plan to set up China-Russia RMB Investment Cooperation Fund.

The memorandum of understanding was signed by the two parties in Moscow on Tuesday.

China-Russia RMB Investment Cooperation Fund is expected to facilitate the establishment of a simplified framework for direct investments with settlements in national currencies.

The investments will total 68 billion yuan ($10 billion). The investment activities will focus on Russian and Chinese projects, including the Belt and Road Initiative.

RDIF will implement the project via the Russia-China Investment Fund (RCIF) created jointly by RDIF and China Investment Corp, while China Development Bank will implement the project via its wholly owned subsidiary China Development Bank Capital.

"China-Russia RMB Investment Cooperation Fund is an important cooperation between China and Russia in the equity investment segment, which is acknowledged and supported by Chinese and Russian governments," said Hu Huaibang, chairman of CDB.

"It will promote the comprehensive and long lasting financial and economic partnership between two countries, and facilitate RMB internationalization," said Hu.

Kirill Dmitriev, CEO of the Russian Direct Investment Fund and co-CEO of the Russia-China Investment Fund, said: "This framework is a powerful driver of direct cross-border investments with a potential to increase the number of joint Russia-China projects significantly."

The Russian Direct Investment Fund and China Investment Corp also announced on Tuesday to have a capital increase of the Russia-China Investment Fund.

In accordance with the agreement, capital under the RCIF's management is to be increased by $1 billion through proportional contributions of RDIF and CIC. An additional amount of up to $2 billion can be provided by new investors.

RCIF's investment activities are aimed at developing the bilateral economic, trade and investment relations between Russia and China. Since its foundation in 2012, RCIF has committed 19 investments worth $1 billion in wood processing, transport infrastructure as well as the financial, technological and consumer sectors. Joint investments of RCIF and its partners amount to $5 billion.