Consider the following statements in respect of the digital rupee:

Question

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

Answer 1

(d) 1, 2 and 4

Explanation:

• It is a sovereign currency issued by the Reserve Bank of India (RBI) in alignment with its monetary policy: Correct. The digital rupee, like physical currency, is issued by the RBI and is aligned with its monetary policy.

• It appears as a liability on the RBI's balance sheet: Correct. The issuance of digital currency would be recorded as a liability on the RBI's balance sheet, similar to physical currency.

• It is insured against inflation by its very design: Incorrect. The digital rupee, like physical currency, is not inherently insured against inflation. Inflation management is achieved through broader monetary policy measures, not through the design of the currency itself.

• It is freely convertible against commercial bank money and cash: Correct. The digital rupee is designed to be freely convertible with commercial bank money and cash, maintaining the same value and usability.

Therefore, the correct statements are 1, 2, and 4, making option (d) the correct answer.