A central bank is evaluating the design of a retail central bank digital currency (CBDC). They want to ensure user privacy while preventing illicit activities. Which design feature is most aligned with this goal?

Use zero-knowledge proofs to allow users to prove compliance without revealing transaction details

Implement a tiered anonymity system with no oversight

Make all transactions fully transparent on a public ledger

Use a permissioned blockchain with a single validator

What is the primary function of a blockchain bridge?

To enable the transfer of assets or data between two different blockchain networks

To provide a backup of the blockchain's transaction history

To encrypt all transactions on a blockchain

To increase the block size limit of a blockchain

What is the primary role of an automated market maker (AMM) in decentralized finance?

To provide liquidity using a mathematical formula that determines asset prices

To act as a central clearinghouse for all DeFi transactions

To mine new tokens for the network

To match buyers and sellers through an order book

A central bank is designing a CBDC that must support high transaction throughput, be energy-efficient, and allow for regulatory oversight. They are considering using a permissioned blockchain with a Proof of Authority (PoA) consensus. What is the most significant trade-off they should consider?

PoA does not provide fast finality, which is required for retail payments

PoA centralizes control in a few validators, which may conflict with the goal of a decentralized digital currency

PoA is not energy-efficient enough for a national-scale CBDC

PoA is not compatible with regulatory oversight

EC-CouncilBlockchain Fintech Certification

Domain 9Objective 6

Advanced Blockchain Concepts and Future Innovations in FinTech BFC Practice Questions (Page 7)

Part of the Financial Modeling and Enterprise Platforms domain, which makes up ~13% of our current practice bank.

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Questions 31–35

31application · medium
A central bank is evaluating the design of a retail central bank digital currency (CBDC). They want to ensure user privacy while preventing illicit activities. Which design feature is most aligned with this goal?
Select an answer first
32foundation · easy
What is the primary function of a blockchain bridge?
Select an answer first
33foundation · easy
What is the primary role of an automated market maker (AMM) in decentralized finance?
Select an answer first
34application · medium
A healthcare fintech company wants to store patient payment records on a blockchain while keeping the actual payment amounts confidential from the public, but still allow auditors to verify that the totals match. Which privacy technology would best achieve this?
Select an answer first
35expert · hard
A central bank is designing a CBDC that must support high transaction throughput, be energy-efficient, and allow for regulatory oversight. They are considering using a permissioned blockchain with a Proof of Authority (PoA) consensus. What is the most significant trade-off they should consider?
Select an answer first

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