Daily Questions

1.

1. With reference to the de-dollarization of the US Dollar, consider the following factors:

A. Liquidity of the financial market in the US.

B. Expansionary monetary policy by the US Federal Reserve.

C. Invoicing foreign trade in the Indian currency.

D. Trust in the US financial markets.

How many of the above factors can cause the de-dollarization of the US Dollar?

Explanation:

Reasons for US Dollar’s Global Acceptability:

• The global acceptability of the US Dollar has primarily been attributed to the popularity of the US assets among the investors. For several decades, the United States of America has maintained a trade imbalance, meaning that its imports have consistently outpaced its exports to other countries. The surplus dollars that the US trade imbalance causes the rest of the world to accumulate have been invested in US assets, such as government-issued debt instruments.
• The high level of trust that the global investors have in the US financial markets, perhaps owing to the ‘rule of law’ in the US, is a major reason the investors prefer to invest in the US assets. Also, the US boasts the world’s deepest and most liquid financial market, burnishing its credentials as the owner of the world’s reserve currency.

Reasons for De-Dollarization:

• Expansionary Policy of the US Federal Reserve: A reckless increase in the money supply has the potential to devalue the currency and jeopardize its standing as a reserve currency.

Expansionary monetary policy adopted by the US Federal Reserve over the decades to argue that this could threaten the US Dollar’s status as a global reserve currency.

• Use of Alternatives: Multiple countries have started exploring settlement of cross-border trade and investments in their own or alternate third-party currencies, ditching the Dollar as the intermediary.

2. Consider the following statements about the WTO’s Information Technology Agreement (ITA):

A. The ITA requires each participant to eliminate and bind customs duties at zero for all products specified in the Agreement.

B. The ITA now covers approximately 90% of the world trade in information technology products.

C. The Agreement does not tackle nontariff barriers.

How many of the above statements is/are incorrect?

Explanation:

• The Information Technology Agreement (ITA), signed in December, 1996, aims to eliminate all import duties and other charges on information technology products. The ITA requires each participant to eliminate and bind customs duties at zero for all products specified in the Agreement.
• The ITA now covers 81 WTO (World Trade Organisation) members, which account for approximately 97% of the world trade in information technology products.
• In addition, the Agreement commits to addressing non-tariff obstacles in the IT industry and to periodically review the list of covered items to assess the need for additional expansion in light of emerging technologies.

3. Consider the following statements about the Liberalised Remittance Scheme:

A. All resident individuals are allowed to freely remit up to USD 2,50,000 per financial year.

B. Trading in foreign exchange abroad is permissible under the Liberalised Remittance Scheme.

Which of the statements given above is/are correct?

Explanation:

• All resident individuals may freely remit up to USD 2,50,000 per financial year (April through March) for any permitted current or capital account transaction, or a combination of both, under the Liberalized Remittance Scheme (LRS).
• The individuals can avail forex facilities under the LRS for the purposes like studies abroad, going abroad for employment, medical treatment expenses abroad, private visits to foreign countries, gifts/donations, maintenance of close relatives abroad etc.
• However, certain items, like investment in the FCCBs (Foreign Currency Convertible Bonds), issued by the Indian companies in the overseas market, and trading in foreign exchange abroad are prohibited under the Liberalised Remittance Scheme.

4. Which paradigm shift is anticipated in the future of banking, emphasizing hyper-personalization and a move from sectoral to ecosystem approach?

Select the correct option from the following:

A. Decentralized banking model

B. Hyper-personalised embedded banking

C. Traditional banking segmentation

D. Isolated service provisions

Answer:  Option B –   Hyper-personalised embedded banking. 

Explanation: 

• The future of banking is expected to shift towards hyper-personalisation and an ecosystem approach, moving away from traditional sectoral segmentation.
• Hyper-personalised embedded banking implies tailoring financial services to individual customer preferences within a broader ecosystem, departing from isolated service provisions.
• This model aligns with the evolving dynamics of the banking industry.

5.

In the realm of emerging challenges, which technological phenomenon involves the surreptitious use of artificial intelligence to create highly convincing counterfeit content, often indistinguishable from authentic material, presenting a significant threat to the integrity of visual and auditory information?

Select the correct option from the following:

A. Quantum encryption

B. Blockchain consensus

C. Deepfake technology

D. Neural network cybersecurity

Answer:  Option C – Deepfake technology 

Explanation:

• Deepfake technology employs artificial intelligence to generate manipulated content, seamlessly blending and altering audio-visual elements to create deceptive material.

This poses a substantial risk to the authenticity of media content, as it can produce remarkably convincing forgeries that are challenging to discern from genuine information