Evolution and Role of Digital Currencies in Finance BFC Practice Questions (Page 7)

Questions 31–35

1. 31expert · hard

   A country is experiencing hyperinflation, and its citizens are adopting a foreign stablecoin for everyday transactions. The central bank wants to maintain monetary sovereignty while acknowledging the citizens' need for a stable currency. Which policy is most likely to achieve both goals?

   • ACreate a new cryptocurrency with a fixed supply and no backing
   • BAdopt the foreign stablecoin as the official national currency
   • CIssue a domestic CBDC pegged to a stable external reference, such as a major fiat currency or a commodity basket
   • DBan the use of all foreign stablecoins and force citizens to use the national fiat currency
   Reveal Solution Discussion Select an answer first
2. 32application · medium

   A credit union is exploring how to compete with digital currency-based lending platforms. The credit union's members value personalized service and community trust. Which strategy best leverages these strengths?

   • APartner with a large tech company to offer a generic digital wallet
   • BFocus solely on traditional products and ignore digital currencies
   • COffer a digital currency savings account that integrates with the credit union's existing member relationships
   • DLaunch a fully decentralized lending platform without member verification
   Reveal Solution Discussion Select an answer first
4. 33expert · hard

   A country with a history of hyperinflation is considering adopting a foreign stablecoin as legal tender. The central bank is concerned about losing monetary policy autonomy. Which alternative best addresses the central bank's concern while providing the benefits of a stable currency?

   • AIssue a domestic CBDC pegged to a stable foreign currency
   • BAdopt the foreign stablecoin as the sole legal tender
   • CMaintain the current fiat currency and hope inflation stabilizes
   • DUse a cryptocurrency like Bitcoin as legal tender
   Reveal Solution Discussion Select an answer first
5. 34application · medium

   A large commercial bank is losing fee income from wire transfers and remittances because customers are using a popular cryptocurrency. The bank wants to retain customers while adapting to the new competitive pressure. Which strategy best aligns with the bank's goal of staying relevant in a digital-currency environment?

   • ALobby regulators to ban the use of cryptocurrencies for everyday payments
   • BOffer a cryptocurrency custody and trading service through the bank's existing mobile app
   • CIncrease fees on wire transfers to compensate for lost revenue
   • DIgnore the trend and focus on traditional banking services
   Reveal Solution Discussion Select an answer first
6. 35application · medium

   A national bank is evaluating whether to issue a digital currency that can be used for retail payments and also serve as a settlement asset for interbank transfers. The bank's primary concern is maintaining monetary policy control while ensuring the system can handle peak transaction volumes. Which historical digital currency model should the bank's design most closely follow?

   • AA commodity-backed digital certificate redeemable for physical gold at any time
   • BA centralized digital cash system with a trusted issuer and a two-tier distribution model
   • CA fully decentralized cryptocurrency with no central issuer and open participation in consensus
   • DA private digital token issued by a consortium of commercial banks without central bank involvement
   Reveal Solution Discussion Select an answer first