Consider the following statements in respect of the digital rupee: 1. It is a sovereign currency issued by the Reserve Bank of India (RBI) in alignment with its monetary policy. 2. It appears as a liability on the RBI's balance sheet. 3. It is insured against inflation by its very design. 4. It is freely convertible against commercial bank money and cash. Which of the statements given above are correct?

1. Correct. Digital rupee (CBDC/e₹) is a sovereign currency issued by the RBI and is designed to be consistent with monetary policy.
2. Correct. Like physical currency, CBDC is a liability on the RBI’s balance sheet.
3. Incorrect. It is not inherently protected against inflation; its value depends on the same macroeconomic conditions as the rupee.
4. Correct. RBI states CBDC is freely convertible into cash and commercial bank money.

Therefore, statements 1, 2 and 4 are correct.