Central Bank Digital Currencies (CBDCs) and e-CNY BFC Practice Questions (Page 1)

Questions 1–5

1. 1application · easy

   A central bank is considering issuing a CBDC to improve the efficiency of the country's payment system. The bank wants to ensure that the CBDC is available to all citizens, including those without bank accounts, and that it can be used for everyday purchases. Which type of CBDC should the bank issue?

   • AWholesale CBDC, which is restricted to financial institutions
   • BRetail CBDC, which is accessible to the general public and designed for everyday transactions
   • CAccount-based CBDC that requires a commercial bank account
   • DToken-based CBDC with no central authority
   Reveal Solution Discussion Select an answer first
2. 2expert · hard

   A geopolitical analyst is comparing the e-CNY with the European Central Bank's digital euro project. The analyst wants to identify a key difference in their design philosophies that could affect international adoption. Which difference is most significant?

   • Ae-CNY is being developed with a focus on domestic retail use and potential cross-border trade, while the digital euro emphasizes privacy and limiting the euro's international role
   • Be-CNY is based on blockchain, while the digital euro is not
   • CThe digital euro is designed to be fully anonymous, while e-CNY is fully traceable
   • DThe digital euro uses a two-tier model, while e-CNY uses a single-tier model
   Reveal Solution Discussion Select an answer first
4. 3application · medium

   A multinational corporation operating in China wants to accept e-CNY for retail transactions. The company's compliance team asks how e-CNY is issued and who holds the customer-facing relationship. Which statement accurately describes the e-CNY operational model?

   • ACommercial banks create e-CNY independently and back it with their own reserves
   • Be-CNY is issued by a consortium of state-owned banks without PBOC involvement
   • CThe People's Bank of China (PBOC) directly issues e-CNY to every individual consumer, bypassing commercial banks
   • DThe PBOC issues e-CNY to authorized commercial banks and payment institutions, which then distribute it to consumers
   Reveal Solution Discussion Select an answer first
5. 4expert · hard

   A central bank is weighing a retail CBDC design that offers interest-bearing balances and allows unlimited conversion from commercial bank deposits. The bank is concerned about the potential for bank disintermediation during periods of financial stress. Which design modification would most directly mitigate this risk?

   • ADesigning the CBDC as a wholesale-only instrument
   • BImposing a tiered holding limit and making the CBDC non-interest-bearing
   • CAllowing unlimited conversion but requiring a 30-day notice period
   • DMaking the CBDC interest-bearing at a rate above commercial bank deposit rates
   Reveal Solution Discussion Select an answer first
6. 5foundation · easy

   In the two-tier operational model of e-CNY, what is the role of the first tier (the central bank)?

   • ATo set interest rates on e-CNY holdings
   • BTo distribute e-CNY directly to individual citizens and businesses
   • CTo issue e-CNY and manage the overall supply and liability
   • DTo process every individual transaction in real time
   Reveal Solution Discussion Select an answer first