Prelims 2023 · Economy · Question 92
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?
Answer
Both 1 and 2
1. Correct. CBDCs can enable direct cross-border settlement between participating central banks/payment systems, so transactions need not route through the US dollar or the SWIFT messaging network.
2. Correct. A CBDC can be made programmable, meaning conditions can be embedded in it—such as limiting where, when, or by when it must be spent.
Therefore, both statements are correct.