The multipolarization of the global reserve currency system is accelerating. Ironically, Western sanctions against Russia have intensified the move away from the U.S. dollar.

The financial sanctions that are being placed on Russia have put the focus onto the over reliance of global trade on the U.S. dollar, especially when it comes to precious oil. Now, Saudi Arabia is preparing for the first time ever to start pricing some oil exports in the yuan which could lead to massive ripple effects in the energy market.

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.

In the past, the U.S. dollar and Chinese yuan used to move inversely. Recently, that has not been the case. The dollar is appreciating, and so is the yuan. Are the bilateral currencies decoupling?

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.

China’s state-backed digital currency has the potential to reshape global financial markets and could revolutionize money for good.

The People’s Bank of China is pressing forward with a digital yuan, which leaves China’s digital currency plans significantly ahead of western nations’. While the U.S dollar has dominated global trade since WWII, the yuan, whether digital or analog, will have a leading role in challenging the hegemony of the dollar.

China’s digital yuan development program could eventually undermine the dollar’s global primacy in international trade. Its implementation would spark discussion surrounding the overall utility of current global trade relationships under a single reserve currency.

In a rare harmony of interests, both China and the United States are pushing to stabilize the yuan. What remains to be seen is how this hypothetical agreement will bear on China’s long-term journey toward the yuan becoming one of the world’s principal reserve currencies.

China’s oil futures contracts could help internationalize the renminbi and undercut the US dollar.