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Bank Promotion Exam Guide

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Module: General Practice

Q100: Consider the following statements distinguishing CBDC from UPI:

Assertion (A): In a UPI transaction, the settlement risk exists between the remitter and beneficiary banks, whereas in a CBDC transaction, there is no inter-bank settlement risk.
Reason (R): CBDC involves the transfer of "Central Bank Liability" directly from one wallet to another, whereas UPI is merely a messaging, clearing, and settlement overlay on top of existing commercial bank money.
A
Both A and R are true, and R is the correct explanation of A
B
Both A and R are true, but R is not the correct explanation of A
C
A is true, but R is false
D
A is false, but R is true
✅ Correct Answer: A
🎯 Quick Answer:
Both are true, and the logic is sound.
Concept Definition: The distinction between Commercial Bank Money (used in UPI) and Central Bank Money (used in CBDC). The Mechanism (R): UPI: When you pay ₹100, your bank (Bank A) must settle with the receiver's bank (Bank B). If Bank A collapses before settlement (in a Deferred Net Settlement system), there is a risk.
CBDC: You are handing over a digital "Cash Note" (RBI Liability). The movement is instant and final.
The Consequence (A): Because CBDC is the movement of the liability itself (not a promise to pay later), it eliminates "Settlement Risk" between banks.
It achieves "Finality of Settlement" at the moment of transfer.
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