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?

Describes CBDCs as legal‑tender digital money, faster payments, and built on DLT — framing them as a national payment instrument that could operate differently from existing systems.

A student could infer that if a CBDC is legal tender and uses DLT, countries might route payments bilaterally over alternate rails rather than via dollar/SWIFT and then check examples of cross‑border DLT pilots.

Explains central banks issue digital currencies to meet public need and to retain control versus private cryptocurrencies — showing central banks’ motive and authority to create alternate payment instruments.

One could reason that sovereign backing makes other central banks more willing to accept a CBDC in payment arrangements; compare which countries have launched CBDC pilots and whether they settled outside USD/SWIFT.

States that the central bank typically drives national payment systems and authorises payment operators, implying central banks can design cross‑border connectivity rules for a CBDC.

Using this, a student can look for whether central banks have bilateral/ multilateral agreements or interoperable standards enabling CBDC transfers without routing through existing correspondent banking (SWIFT) links.

Explains SDRs are not directly usable to buy goods/services and must be exchanged for hard currencies, highlighting that international settlements often require conversion into widely accepted reserve currencies.

A student can use this pattern to ask whether CBDCs would need conversion into reserve currencies like the US dollar for international trade settlement, or whether direct CBDC‑to‑CBDC arrangements could substitute.

Describes cryptocurrencies as decentralized internet‑transferred money and notes cross‑border transferability (and risks), providing an example of non‑dollar digital value transfer outside traditional rails.

One could analogise that CBDCs might combine sovereign backing with decentralised rails to permit non‑USD cross‑border payments, then check legal/treatment and technical interoperability differences between crypto and CBDCs.