🧷 Authentic Classroom Explanation by IAS Monk

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📌 The Question:

Consider the following 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

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🧠 Curiosity Raiser

If digital rupee is “digital”, why is it treated exactly like cash and not like bank balance?

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📘 Enrichment Notes (Concept + Current Affairs)

🔹 What is Digital Rupee (CBDC)?

• CBDC (Central Bank Digital Currency) is defined by RBI as:
  • Legal tender issued by a central bank in digital form
• It is not crypto
• It is not commercial bank money

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Statement-wise Breakdown

• Statement 1 ✅ Correct
  • Digital rupee is a sovereign currency
  • Issued by RBI in line with monetary policy
• Statement 2 ✅ Correct
  • CBDC is a direct liability of RBI
  • Unlike bank deposits, which are liabilities of commercial banks
• Statement 3 ❌ Incorrect
  • CBDC is not inflation-proof by design
  • Inflation control depends on monetary policy, not the digital form of money
• Statement 4 ✅ Correct
  • Digital rupee is freely convertible 1:1
  • Can be exchanged against:
    • Cash
    • Commercial bank money

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🔑 Key Features to Remember (Prelims Gold)

• Legal tender
• RBI liability
• Fungible (like cash)
• No bank account mandatory
• 1:1 convertibility with fiat money

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🧘‍♂️ IAS Monk Whisper

Changing the form of money does not change its soul; discipline does.