Answer-The most critical distinction between the e-Rupee (CBDC) and a bank deposit is that:

The most fundamental distinction is that the e-Rupee is a direct liability of the Reserve Bank of India it carries zero credit risk because the RBI, as the sovereign central bank, cannot default on its own issued currency. A bank deposit, in contrast, is a liability of the commercial bank it carries bank credit risk mitigated by DICGC deposit insurance up to Rs. 5 lakh per depositor per bank. Additionally, bank deposits earn interest while the e-Rupee in its current design does not, to prevent disintermediation of banks.

Question

The most critical distinction between the e-Rupee (CBD

C and a bank deposit is that:

A The e-Rupee is a direct liability of the RBI and carries zero credit risk, while a bank deposit is a liability of the commercial bank and carries bank credit risk

B The e-Rupee earns a higher interest rate than a bank savings deposit

C Bank deposits can only be used for domestic transactions, while the e-Rupee can be used for cross-border transactions

D There is no material difference; both are forms of government-backed money

E The e-Rupee requires a separate KYC process distinct from the existing bank KYC

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