UPSC Prelims 2023 – Question 72

Q72. 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 the 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? 

1. 1 only 

2. 2 only 

3. Both 1 and 2 

4. Neither 1 nor 2 

Correct Answer: Option (c) 

• Central Bank Digital Currency (CBDC) is a digital form of currency notes issued by a central bank. Here payments in a digital currency are without using the US dollar or SWIFT system. Hence, statement 1 is correct. 
• A CBDC is programmable to the point that the currency can be made to expire, thus forcing consumers to use it upto a certain date. Hence, statement 2 is correct. 

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