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?

Answer: D. Statements 1, 2 and 4 are correct; Statement 3 is wrong. The Digital Rupee (e-Rupee / e-INR) is RBI's Central Bank Digital Currency, piloted in 2022 for wholesale and 2023 for retail. (1) CORRECT. Digital Rupee is a sovereign currency issued by RBI, integrated with India's monetary policy framework. It is RBI's official CBDC. (2) CORRECT. As a liability of the RBI, the Digital Rupee appears on the RBI balance sheet just like physical currency notes do. The corresponding asset side records government securities or other assets. (3) WRONG. Digital Rupee is NOT insured against inflation by design. It is fiat money like physical rupees; its purchasing power can decline with inflation. CBDCs are not inflation-proof. (4) CORRECT. Digital Rupee is freely convertible 1:1 with commercial bank deposits and cash. This convertibility is core to its design as a substitute for physical cash. Source: RBI Concept Note on CBDC (October 2022) / Press releases on retail pilot launch.