With reference to Central Bank digital currencies, consider the following statements:It is possible

Question

With reference to Central Bank digital currencies, consider the following statements:It is possible to make payments in a digital currency without using US dollar or SWIFT system.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?

Accepted Answer

Alternatives to SWIFT and the U.S. dollar are coming from two directions: cryptocurrencies and central bank digital currencies. Countries will be able to directly exchange digital currencies in a bilateral way and without going through SWIFT or similar settlement systems.When the technology allows seamless and instantaneous convertibility from one sovereign currency into another, it changes the practical need for a dominant global reserve currency. CBDC could be employed for fiscal transfers to households or firms, such as relief or stimulus payments. Such helicopter drops or subsidies would potentially become easier when there is widespread adoption of CBDC accounts.The transfer payments could also be programmable, with conditions such as expiration upon a certain date or a requirement to spend the funds at certain vendors.Source Attribution: Brookings, World Economic Forum: CBDC Technology Considerations 2021