Correct answer: (a) A mechanism enabling bilateral trade transactions to be invoiced and paid in the currencies of the trading partners rather than a third currency.
Explanation
Option A correctly defines Local Currency Settlement as a mechanism enabling bilateral trade transactions to be invoiced and paid in the currencies of trading partners rather than a third currency. Options B, C, and D describe CBDC interoperability, dollar hegemony, and Inter-Governmental Agreements respectively.
Same topic · past papers
UPSC has asked this before
These previous-year questions sit on the same topic. Open one to practise the earlier ask.
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