Dollar-Yuan Battle in the World Trade Network.

Area of Science:

• Economics
• International Trade
• Network Science

Background:

• The US dollar has dominated global trade since the Bretton Woods agreement.
• The Chinese yuan is emerging as a significant trade currency due to China's economic growth.

Purpose of the Study:

• To mathematically analyze international trade flow structures and their influence on currency preference.
• To model how global trade network dynamics favor either the US dollar or Chinese yuan.

Main Methods:

• Utilized the Ising model to represent a country's trade currency preference as a binary variable.
• Constructed a world trade network using UN Comtrade data from 2010-2020.
• Calculated currency preference based on trade volume with partners and partners' global trade weight.

Main Results:

• Analysis revealed a transition in currency preference from 2010 to the present.
• The structure of the global trade network indicates a majority preference for the Chinese yuan.

Conclusions:

• The global trade network structure suggests a shift towards the Chinese yuan.
• Network dynamics, not just economic size, are crucial in determining international trade currency.