Forest ServicesQ92. 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-fame for spending it.
Which of the statements given above is/are correct?
Detailed Solution
Both statements are correct regarding Central Bank Digital Currencies (CBDCs): 1. **Statement 1**: One of the key motivations for developing CBDCs is to facilitate more direct and efficient cross-border payments, potentially bypassing traditional correspondent banking networks and systems like SWIFT, thereby reducing reliance on a single dominant currency like the US dollar for international transactions.
2. **Statement 2**: CBDCs can be designed with 'programmability' features. This allows for conditions to be embedded into the digital currency itself, such as an expiry date for spending (time-frame) or restrictions on its use for specific purposes or vendors.
This feature is particularly useful for targeted fiscal transfers or subsidies. CBDCs represent a significant development in global finance, frequently discussed in the context of financial innovation and geopolitical shifts, making it a key current affairs topic.
Current Affairs Link
CBDC was frequently in news.
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