With reference to Central Bank digital currencies, consider the following statements: 1. It is possible to make payments in a digital currency without using US dollar or SWIFT system. 2. 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?

Let's analyze the given statements regarding Central Bank Digital Currencies (CBDCs): 1. It is possible to make payments in a digital currency without using US dollar or SWIFT system. This statement is correct. One of the key motivations for central banks to issue CBDCs, especially for cross-border transactions, is to potentially reduce reliance on traditional correspondent banking networks, which often use the US dollar as a major intermediary currency and SWIFT (Society for Worldwide Interbank Financial Telecommunication) for messaging. A CBDC could facilitate direct, faster, and potentially cheaper international payments, bypassing these existing systems. For domestic payments, a CBDC would inherently not use USD or SWIFT. 2. A digital currency can be distributed with a condition programmed into it such as a time-frame for spending it. This statement is correct. CBDCs, particularly those designed with programmable features, can have 'smart contract' like functionalities. This means that rules or conditions for their use can be embedded directly into the digital currency. Examples include setting an expiry date (time-frame for spending), designating it for specific purposes (e.g., welfare payments for food only), or making it accessible only after certain conditions are met. This 'programmable money' feature offers central banks new tools for policy implementation. Both statements are correct.