UPSC CSE Prelims
Question 74
With reference to Central Bank digital currencies, consider the following statements :
- It is possible to make payments in a digital currency without using US dollar or SWIFT system.
- A digital currency can be distributed with a condition programmed into it such as a timeframe for spending it.
Which of the statements given above is/are correct?
View correct answer and explanation
Correct answer: C
Correct Option: C (Both 1 and 2)
Explanation: CBDCs can enable direct digital cross-border settlement outside correspondent-dollar/SWIFT rails, and some architectures support programmable payment conditions.
Statement / Pair / Item-wise Analysis:
1. Correct/True - CBDC arrangements can be designed to settle without US-dollar intermediaries or the SWIFT messaging system.
2. Correct/True - Programmable features could impose conditions, such as expiry or time limits, depending on the CBDC design.
Option-wise Analysis:
A. Incorrect-omits correct item 2 (Programmable features could impose conditions, such as expiry or time limits, depending on the CBDC design.).
B. Incorrect-omits correct item 1 (CBDC arrangements can be designed to settle without US-dollar intermediaries or the SWIFT messaging system.).
C. Correct-exactly 2 of the 2 listed items satisfy the condition.
D. Incorrect-omits correct item 1 (CBDC arrangements can be designed to settle without US-dollar intermediaries or the SWIFT messaging system.); omits correct item 2 (Programmable features could impose conditions, such as expiry or time limits, depending on the CBDC design.).
Review note: CBDC programmability is a design possibility, not a claim that every central bank currency currently imposes expiry limits.