With reference to digital rupee (eRe), consider the following statements;1.eRe will provide an additional option to the currently available forms of money.2.Under the indirect model, the central bank will be responsible for managing all the aspects of the CBDC system3.A token-based CBDC is viewed as a preferred mode for CBDC-retail as it will be closer to physical cash.Which of the statements given above is/are correct?

[A] .1 and 3 only

[B] 2 and 3 only

[C] 2 only

[D] .1, 2 and 3

Answer: A

Notes:

Statement 1 is correct: eRe will provide an additional option to the currently available forms of money.

Statement 2 is incorrect: Two models are being examined for the issuance and management of CBDCs.

a) Direct model (single-tier model): Under this, the central bank will be responsible for managing all the aspects of the CBDC system, such as issuance, account-keeping, and transaction verification.
b) Indirect model (two-tier model): Under this model, the central bank will issue the CBDC to consumers indirectly through intermediaries (banks and any other service providers) and any claim by consumers is managed by the intermediary because the central bank will only handle wholesale payments to intermediaries.

Statement 3 is correct: A token-based CBDC is viewed as a preferred mode for CBDC-retail as it will be closer to physical cash.