UPSC Prelims 2023 · GS Paper I
Question 72: Economy and Social Development
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?
AnswerUPSC’s answer is (c).
Both statements are correct. A central bank digital currency is a digital form of a country's currency that can be used for payments without routing through the US dollar or the SWIFT messaging system, for example on direct bilateral or multi-country payment platforms. CBDCs can also be programmable: value can be issued with conditions attached, such as an expiry date, a time-frame for spending, or use limited to specified purposes.
- 1. A CBDC can settle payments without the dollar or SWIFT.
- 2. CBDCs can be programmed with conditions like spending time-frames.
How you could have got this
- If you were sure statement 1 is correct, (b) and (d) go: each of them leaves 1 out.
What you needed to know: A CBDC can settle payments without the dollar or SWIFT.
- Then, if you were sure statement 2 is correct, (a) goes: it leaves 2 out.
What you needed to know: CBDCs can be programmed with conditions like spending time-frames.
Only (c) is left. This one needs every statement.
Which options go is worked out from UPSC’s key and the options, not by a model.
Why each option is right or wrong
- (a) Statement 2 is also correct, so '1 only' undercounts.
- (b) Statement 1 is also correct, so '2 only' undercounts.
- (c) Correct: both statements hold.
- (d) Both statements are true, so not neither.
Answer: UPSC’s key. Explanation: written by UPSC Grade, not by UPSC.
Source: UPSC, Civil Services (Preliminary) Examination 2023, General Studies Paper I, Series A. The paper on upsc.gov.in.