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?

Statement 1 is correct because CBDCs allow for direct peer-to-peer or central bank-to-central bank settlements, bypassing traditional intermediaries like SWIFT and the necessity of using the US dollar as a bridge currency. Statement 2 is correct because CBDCs are "programmable" money, meaning smart contracts can be embedded to enforce specific conditions such as expiry dates or targeted spending for subsidies. Option (a) is a common pitfall if a candidate views CBDCs merely as digital versions of physical cash without recognizing their advanced technological capabilities like programmability. The core concept tested is the functional architecture of Central Bank Digital Currencies, specifically their role in financial disintermediation and policy implementation.