This essay explores the purpose, progress, and strategic political motivations driving China’s development of the digital yuan. This central bank digital currency is not merely a technological advancement or modernisation of a fiat currency, it also serves as a key instrument in the agenda of the People’s Bank of China to consolidate monetary authority. The essay analyses the development of the digital yuan in the context of China’s broader economic and political strategies, including enhancing financial inclusion, centralising the nation’s payment ecosystem—currently dominated by private fintech players—and potentially challenging the US dollar’s global dominance. It also assesses its possible impacts on international trade, while addressing the challenges it faces in gaining global acceptance.