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Will a retail Central Bank Digital Currency (CBDC) be deployed in the United States by 2030? Hi everyone, and welcome to our channel. I'm excited to help you predict the future of finance, technology, business, geopolitics, and more as the world is becoming increasingly complex. By leveraging experts, and aggregating predictions from multiple sources, including the collective wisdom of the internet via AI chatbots, together we can gain strategic foresight into emerging trends and benefit from making better predictions. Today, we're going to explore predictions relating to the deployment of Central Bank Digital Currencies (CBDCs), specifically we’ll consider when a retail CBDC might go live in the United States. We’ll explain what the difference is between a retail and wholesale CBDC, and how they compare with crypto currencies. We’ll also assess the geopolitical and economic ramifications, and explain why this topic is so important as it has the potential to affect every person on the planet. Introduction A CBDC is a digital currency issued by a country's central bank. They are similar to cash, but they exist only in digital form. They also do away with multiple intermediaries such as clearing or correspondent banks that perform a chain of convoluted transactions that can take several days to fully complete. The technology behind CBDCs will immediately know if funds are available and will process payments almost instantly at a fraction of the cost. CBDCs can be used for both retail and wholesale payments. Retail CBDCs are designed for use by individuals and businesses, just like cash. Whereas wholesale CBDCs are designed to settle payments between banks and other financial institutions. According to the Central Bank Digital Currency tracker countries representing over 95 percent of global GDP are exploring a CBDC, and some have already gone live. Here’s a timeline of CBDC development across the world. Eleven countries have launched, 32 are in development, and 46 are in the research phase. In the United States, the Federal Reserve quietly deployed FedNow on the 20th of July, 2023. The Fed refers to it as a real-time gross settlement (RTGS) system, but to all intents and purposes it is a fully fledged CBDC. As previously mentioned, CBDCs offer a number of potential benefits, such as faster and cheaper payments compared to traditional payment methods. It is claimed that they will increase financial inclusion by making it easier for people to access and use digital money. CBDCs can also reduce risk of fraud by providing a more secure and transparent way to make payments. However, there are also some challenges associated with CBDCs. As all transactions are recorded on a central ledger they could be vulnerable to cyberattacks from hackers or rogue nations. Also, every transaction can potentially be monitored and controlled in real-time by the governments and central banks that issue them. Being able to see the flow of funds through every bank account would enable governments to calculate and collect tax automatically, and have the power to interfere with any transactions they deem necessary. CBDCs also need to be interoperable to enable integration with existing banking infrastructure. So the design of CBDCs is complex as there are many factors that need to be considered prior to deployment. Despite the challenges, CBDCs are viewed by governments and central banks as a promising new technology that has the potential to revolutionize the way payments are processed. For this reason the deployment of CBDCs across the world appears to be inevitable. We could eventually see a global CBDC system that becomes a one world currency, but more on that later. So what’s the difference between a CBD, a cryptocurrency, and a stable coin? Well a CBDC is a digital currency issued by a central bank, while a cryptocurrency is a digital or virtual currency or token that uses cryptography for security. CBDCs are highly regulated, and they are designed to be used as a medium of exchange. Cryptocurrencies, on the other hand, are not backed by any government or institution, and they are often used as a store of value or a speculative asset. Not all cryptocurrencies or tokens are fully decentralized, and some are hybrids. For example, XDC, XRP, HBAR as well as ALGO, IOTA, XLM, and QNT are compatible with an emerging CBDC messaging standard called ISO 20022. A stablecoin is a cryptocurrency that is designed to maintain a stable value, typically pegged to a fiat currency such as the US dollar or the euro. Stablecoins are often used as a way to store value or to make payments, as they are less volatile than other cryptocurrencies. When someone buys a stablecoin, the issuer of the stablecoin agrees to exchange it for say US dollars on demand. This ensures that the value of the stablecoin remains stable, as it can always be exchanged back into US dollars. So what are the implications of CBDCs? If you think that a global CBDC system controlled by a few very powerful entities that act as an all encompassing state surveillance network sounds rather Orwellian, you’re not alone! This technology could also eventually be used to tokenize every asset on the planet including stocks, physical goods, and commodities. That would enable everything to be tracked, monitored, and controlled by state actors and multinational corporations. Henry Kissinger famously said, “Who controls the food supply controls the people; who controls the energy can control whole continents; who controls money can control the world.” It will give governments the ability to freeze accounts for any reason, enforce different interest rates and spending criteria on an individual basis, as well as credit and debit funds at will. As CBDCs are a programmable form of smart money they will even have the power to decide how funds are to be spent in real-time, or set an expiration date on bank deposits if the economy starts to slow. For example, in order to discourage saving, funds could be programmed to automatically disappear if they are not spent by a stipulated deadline. As a result, CBDCs could be a force for good or evil depending on how they are deployed and operated. Even if the general populations are against the introduction of sovereign CBDCs, the consensus appears to be that they are likely to be rolled out regardless. It is likely that governments will adopt a carrot and stick approach. Before deployment, they could manipulate the economy by printing huge sums of money to push up inflation.They could then rapidly raise interest rates in order to inflict pain on the economy. A sudden increase in the cost of living followed by widespread unemployment would then lead to civil unrest. Government could then claim that replacing the current system with a CBDC would lead to far more stability and security for all. By this time a large number of people who are out of work will be told that the only way they can obtain welfare, or any form of government support is by downloading a wallet and receiving payments directly from the central bank. The national currency would be devalued or even made worthless due to hyperinflation, and cash would be removed from circulation. Vendors would then be forced to only accept CBDC payments, so the population would have no other choice but to exchange their obsolete currency into the newly created centrally controlled CBDC at a highly favorable exchange rate. Let’s now switch our perspective away from domestic affairs, and focus on how CBDCs could be used as a strategic weapons of war. Before we do it’s important to state that any government has the capability to abuse power, even the United States. However, let’s avoid judgment and focus purely on how western nations could use a CBDC to enforce sanctions against what they consider as strategic adversaries such as Russia, China, as well as rogue nations such as North Korea and Iran. Leveraging CBDCs for sanctions enforcement offers distinct advantages, including increased transparency, traceability, and real-time monitoring of financial transactions. However, there are potential challenges and considerations associated with this approach. Sanctions have been a cornerstone of international diplomacy, enabling countries to exert pressure on adversaries without resorting to military action. The emergence of CBDCs introduces a novel dimension to sanctions enforcement, offering a more precise and efficient means to limit targeted nations' access to vital economic resources. Major economies like the United States, EU and UK could block wallets held by sanctioned entities from transacting directly with CBDCs issued by western central banks. Something similar was attempted by western banks when Russia invaded Ukraine in February 2022. The European Union, United Kingdom, United States and other allies effectively weaponized access to the global financial system by blocking some Russian banks from accessing Society for Worldwide Interbank Financial Telecommunication system (SWIFT) which operates a global cross-border payment system. Although effective, using CBDCs to prevent sanctioned parties from making payments using CBDCs within the western financial system would make it even more difficult for them to circumvent restrictions. CBDCs could be used to place restrictions on purchases of strategic imports like technology components, commodities or industrial goods by adversaries using western allied CBDCs. For example, the US and EU could prohibit use of their CBDCs to purchase Chinese exports of rare earth minerals critical to technology manufacturing.