Q. Consider the followinag 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?
(a) 1 and 2 only
(b) 1 and 3 only
(c) 2 and 4 only
(d) 1, 2 and 4
Correct answer: (d) 1, 2 and 4
Question from UPSC Prelims 2024 GS Paper
Explanation:
1. “It is a sovereign currency issued by the Reserve Bank of India (RBI) in alignment with its monetary policy.”
This statement is correct. The digital rupee is indeed issued by the RBI as a sovereign currency and is aligned with the central bank’s monetary policy.
2. “It appears as a liability on the RBI’s balance sheet.”
This statement is also correct. Like physical currency, the digital rupee would appear as a liability on the RBI’s balance sheet.
3. “It is insured against inflation by its very design.”
This statement is incorrect. The digital rupee, like its physical counterpart, is not inherently insured against inflation. Its value is subject to the same economic factors that affect the traditional rupee.
4. “It is freely convertible against commercial bank money and cash.”
This statement is correct. The digital rupee is designed to be interchangeable with other forms of the Indian rupee, including commercial bank money and physical cash.