China’s economic troubles in 2022, exacerbated by zero-COVID regulations and stiff barriers for travel and exports, have caused consumer demand to hit a new low. The digital yuan, the first centrally backed crypto token, could be the solution Beijing needs to restore consumer trust in their economy.

The international financial infrastructure has long been dominated by Western institutions. China’s advances in digital currency could help spread its influence on global commerce enough to challenge the hegemony of the U.S. dollar.

China’s digital yuan soft launched during the Beijing Winter Olympics, ushering in a new era of financial institutions. Already a leader in digital payment infrastructure, China’s ambition to solidify the digital yuan’s use will change how an already robust ecosystem operates.

The global pandemic’s impact on the economy was an issue that governments worldwide had to deal with, amid changing ways that people manage their money. Digital currency may be the next avenue for market stimulation in China, and beyond.

While many central banks are still investigating the possibility of issuing a digital currency, China has rolled out a digital currency via a series of pilot programs since last year.

China is working to assert itself as a global leader in digital currency through the implementation of the digital yuan. The results of this could unravel the global financial system at worst, but at best, could establish a global infrastructure with equal monetary anchors.