With reference to Central Bank digital currencies, consider the following statements:1. It is possible to make payments in a digital currency without using the US dollar or SWIFT system.2. A digital currency can be distributed with a condition programmed into it such as a time- frame for spending it.Which of the statements given above is/are correct?
✓ Correct answer: c) Both 1 and 2
ExplanationCentral Bank Digital Currencies (CBDCs) are digital forms of a country’s fiat currency which are issued and regulat- ed by the central bank.Statement 1 is correct : Central Bank Digital Currencies (CB- DCs) can operate independently unlike traditional cross-bor- der payments that rely on the US dollar as a reserve currency and the SWIFT (Society for Worldwide Interbank Financial Telecommunication) system for messaging.It can facilitate di- rect peer-to-peer (P2P) transactions or cross-border payments without intermediaries like SWIFT.Countries like China (with its digital yuan) and India (exploring the digital rupee) are develop- ing CBDCs to reduce dependence on the US dollar and SWIFT for international transactions.The m-CBDC Bridge project which involves countries like Chi- na, Hong Kong, Thailand, and the UAE, is an example of how CB- DCs can enable cross-border payments without relying on the US dollar or SWIFT.Statement 2 is correct : One of the key features of CBDCs is their programmability.Central banks can embed specific conditions into the digital currency using smart
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