Role of Cryptoassets and Cryptocurrencies in Trade Finance BBLC Practice Questions (Page 8)

Questions 36–40

1. 36expert · hard

   A trade finance company is considering using a cryptocurrency for cross-border payments. The company's customers are primarily in countries with high inflation and unstable currencies. The company wants to provide a stable payment method while also reducing costs. Which approach best meets these needs?

   • AUse a stablecoin pegged to a major fiat currency like the USD.
   • BUse a commodity-backed stablecoin pegged to gold.
   • CUse a cryptocurrency like Bitcoin, which is deflationary by design.
   • DUse a local cryptocurrency pegged to the country's currency.
   Reveal Solution Discussion Select an answer first
2. 37application · medium

   A small business in Kenya exports handicrafts to customers in Europe. The business currently uses a mobile money service that charges 5% per transaction and takes 3 days to settle. The owner wants to accept cryptocurrency payments to reduce fees and speed up settlement. Which cryptocurrency type would be most appropriate for this use case?

   • AA stablecoin pegged to the euro, because it minimizes currency risk for the European customers and the Kenyan business.
   • BA security token representing the handicrafts, which the customer can hold as proof of purchase.
   • CA utility token that gives the customer discounts on future purchases.
   • DA privacy coin that hides the transaction amount to protect the business's revenue information.
   Reveal Solution Discussion Select an answer first
4. 38expert · hard

   A consortium of banks wants to use blockchain to streamline trade finance processes. They are considering using smart contracts to automate the execution of letters of credit. Which factor is most critical for the success of this initiative?

   • AChoosing the most energy-efficient consensus mechanism.
   • BMaximizing the number of transactions per second.
   • CUsing a public blockchain to ensure transparency.
   • DEnsuring interoperability with existing banking systems and legal frameworks.
   Reveal Solution Discussion Select an answer first
5. 39foundation · easy

   How can smart contracts be used in trade finance to improve efficiency?

   • ABy guaranteeing that all parties will always fulfill their obligations without exception.
   • BBy replacing all legal contracts with code that is not subject to any jurisdiction.
   • CBy automatically executing payment when predefined conditions, such as delivery confirmation, are met.
   • DBy eliminating the need for any human oversight in trade transactions.
   Reveal Solution Discussion Select an answer first
6. 40application · medium

   A bank is exploring the use of a cryptocurrency for cross-border trade settlements. The bank's compliance team is concerned about the risk of money laundering and terrorist financing. Which measure should the bank prioritize to mitigate these risks?

   • AUsing a cryptocurrency with a fixed supply to reduce inflationary risk.
   • BRelying on the blockchain's immutability to ensure compliance.
   • CImplementing robust customer due diligence (CDD) and transaction monitoring systems.
   • DSelecting a cryptocurrency with the fastest transaction speed.
   Reveal Solution Discussion Select an answer first