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: C. Both statements about CBDCs are correct. Statement 1 is CORRECT. Central Bank Digital Currencies enable cross-border payments WITHOUT requiring US dollar conversion or SWIFT messaging. Project mBridge (a BIS Innovation Hub project with China, Hong Kong, Thailand, UAE central banks) demonstrated multi-CBDC settlement bypassing dollar and SWIFT. Bilateral CBDC arrangements (India-UAE, India-Singapore) similarly enable direct currency-to-currency settlement. Statement 2 is CORRECT. CBDCs can be PROGRAMMABLE money: conditions can be embedded directly in the digital tokens. Examples include time-limited spending (must be used within X days), purpose-restricted spending (only at certain merchants or for certain goods), or recipient-restricted transfers. China's e-CNY has piloted programmable features for subsidies. This is a unique advantage over physical cash. Source: BIS CBDC reports / RBI Concept Note on Digital Rupee 2022 / Project mBridge documentation.