UPSC Previous Year Question | Prelims GS | 2023

With reference to Central Bank digital currencies, consider the following statements: 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. 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

Answer

Correct Answer

Both 1 and 2

Explanation

CBDCs enable payments bypassing traditional systems like the US dollar or SWIFT (statement 1), and being programmable, they can be issued with built-in conditions such as expiry/spending time-frames (statement 2), making both statements correct.

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