Central Bank digital currencies — payment without SWIFT/USD; programmable conditions
Question
With reference to Central Bank digital currencies, consider the following statements: Which of the statements given above is/are correct?
- 1.
It is possible to make payments in a digital currency without using 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.
Options
1 only
2 only
Both 1 and 2
Neither 1 nor 2
Explanation
Both statements are correct. A sovereign Central Bank Digital Currency (CBDC) runs on its own decentralized or centralized ledger, allowing direct cross-border settlements that entirely bypass legacy networks like SWIFT or dollar-clearing routes. Because it is digital code, a CBDC is fundamentally programmable, allowing governments to embed smart contracts like usage restrictions or expiry dates.
Answer: (c).
Question details
Year
2023
Paper
GS Paper 1
Question
Q72
Subject
Economy
Sub-topic
Digital Economy & Fintech
Type
Statement-based
Difficulty
Medium
Nature
Current-affairs-linked
Source hint
RBI Central Bank Digital Currency Digital Rupee Pilot 2022
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