Libya's cash-strapped eastern central bank has printed its own notes, overcoming initial opposition from the U.N.-backed western government but sparking concern at the divided country's ability to develop coherent monetary and economic policies.

A statement by the east's central bank, which is based in the city of Bayda, says distribution of the newly-printed 4 billion dinars ($3 billion) would begin 1 June.

The notes were printed in Russia and look different from the other dinar notes in circulation. They are signed by Ali al-Habri, the governor of the Bayda-based central bank.

The U.S. embassy on Wednesday said the notes would be "counterfeit" and would "undermine confidence" in Libya's currency." It noted a U.N. security resolution that calls on member states to only recognize bodies affiliated with the U.N.-backed Tripoli government.