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22 Dec 2025, 09:00
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E
Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!
Difficulty:
45%
(medium)
Question Stats:
74% (01:55) correct
26%
(02:09)
wrong
based on 202
sessions
History
Date
Time
Result
Not Attempted Yet
Central bank digital currencies (CBDCs) are being introduced as a way to strengthen financial systems by reducing dependence on private banks. Proponents argue that since CBDCs offer a risk-free place to hold funds directly with the government, individuals will shift deposits away from commercial banks, lowering the risk of bank runs during economic crises. Therefore, widespread adoption of CBDCs would enhance overall financial stability.
Which of the following, if true, most seriously undermines the reasoning in the argument above?
A. The majority of CBDC pilot users report satisfaction with transaction speed and digital convenience features.
B. Central banks may restrict CBDC account limits to avoid destabilizing commercial lending markets.
C. Surveys show that in regions with high trust in government institutions, public interest in CBDC adoption has been stronger.
D. Private banks have begun offering real-time payment systems and deposit insurance enhancements to retain their customer base.
E. In countries where CBDC pilots have been launched, many citizens have opted to use them for payments but continue to hold their savings in private banks.
Which of the following, if true, most seriously undermines the reasoning in the argument above?
A. The majority of CBDC pilot users report satisfaction with transaction speed and digital convenience features.
B. Central banks may restrict CBDC account limits to avoid destabilizing commercial lending markets.
C. Surveys show that in regions with high trust in government institutions, public interest in CBDC adoption has been stronger.
D. Private banks have begun offering real-time payment systems and deposit insurance enhancements to retain their customer base.
E. In countries where CBDC pilots have been launched, many citizens have opted to use them for payments but continue to hold their savings in private banks.
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22 Dec 2025, 10:00
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GMAT Club Official Explanation:
A. The majority of CBDC pilot users report satisfaction with transaction speed and digital convenience features.
This actually supports the idea that people like CBDCs. If anything, it could strengthen the argument by showing adoption might grow.
B. Central banks may restrict CBDC account limits to avoid destabilizing commercial lending markets.
This undermines the argument but in a slightly indirect way. If there are limits, people can’t move large amounts of money out of banks into CBDCs. That would mean the effect on bank runs might be minimal. Seems more speculative, so let's hold for now.
C. Surveys show that in regions with high trust in government institutions, public interest in CBDC adoption has been stronger.
This says interest in CBDCs depends on trust in government. That’s interesting, but it doesn’t actually show whether people will move their deposits or whether stability improves.
D. Private banks have begun offering real-time payment systems and deposit insurance enhancements to retain their customer base.
This shows banks are fighting back to keep deposits, but it doesn’t prove people won’t move their money to CBDCs. It’s a side detail. We’re looking for something that flat-out undercuts the “CBDCs will drain deposits” link.
E. In countries where CBDC pilots have been launched, many citizens have opted to use them for payments but continue to hold their savings in private banks.
The argument hinges on people shifting deposits away from private banks to CBDCs. If, in practice, people just use CBDCs for quick payments but keep their savings in banks, then the whole “less bank runs” logic collapses. This strongly weakens the argument.
Looking at all the options, E seems to be the best answer.
General Discussion
Archit3110
22 Dec 2025, 09:14
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Central bank digital currencies (CBDCs) are being introduced as a way to strengthen financial systems by reducing dependence on private banks. Proponents argue that since CBDCs offer a risk-free place to hold funds directly with the government, individuals will shift deposits away from commercial banks, lowering the risk of bank runs during economic crises. Therefore, widespread adoption of CBDCs would enhance overall financial stability.
CBDC are being introduced to strengthen financial systems dependence on private banks, CBDC offers risk free place to hold funds directly with Government.....
People will eventually shift deposits away from commercial banks... lowering risk of bank runs at time of economic crisis... widespread CBDC adoption will lead to financial stability....
Which of the following, if true, most seriously undermines the reasoning in the argument above?
A. The majority of CBDC pilot users report satisfaction with transaction speed and digital convenience features.
This is not a weakener but a strengthener
B. Central banks may restrict CBDC account limits to avoid destabilizing commercial lending markets.
There is no discussion or cause effect of 1 account or many.. this option does not weaken the conclusion
C. Surveys show that in regions with high trust in government institutions, public interest in CBDC adoption has been stronger.
The option is a strengthener , not a weakener of the conclusion discussed in argument
D. Private banks have begun offering real-time payment systems and deposit insurance enhancements to retain their customer base.
There is no feature or options because of which switch is expected to happen..
E. In countries where CBDC pilots have been launched, many citizens have opted to use them for payments but continue to hold their savings in private banks.
If citizen continue to hold money in savings private banks there risk will also increase at time of economic crisis and shift to CBDC will be used for payments only.. this option breaks the conclusion ....
OPTION E is correct
CBDC are being introduced to strengthen financial systems dependence on private banks, CBDC offers risk free place to hold funds directly with Government.....
People will eventually shift deposits away from commercial banks... lowering risk of bank runs at time of economic crisis... widespread CBDC adoption will lead to financial stability....
Which of the following, if true, most seriously undermines the reasoning in the argument above?
A. The majority of CBDC pilot users report satisfaction with transaction speed and digital convenience features.
This is not a weakener but a strengthener
B. Central banks may restrict CBDC account limits to avoid destabilizing commercial lending markets.
There is no discussion or cause effect of 1 account or many.. this option does not weaken the conclusion
C. Surveys show that in regions with high trust in government institutions, public interest in CBDC adoption has been stronger.
The option is a strengthener , not a weakener of the conclusion discussed in argument
D. Private banks have begun offering real-time payment systems and deposit insurance enhancements to retain their customer base.
There is no feature or options because of which switch is expected to happen..
E. In countries where CBDC pilots have been launched, many citizens have opted to use them for payments but continue to hold their savings in private banks.
If citizen continue to hold money in savings private banks there risk will also increase at time of economic crisis and shift to CBDC will be used for payments only.. this option breaks the conclusion ....
OPTION E is correct
