📋 Written Ability Test (WAT) / Essay Analysis Guide
🌐 Understanding the Topic’s Importance
National digital currencies can transform the financial landscape, offering insights into economics, policy design, and technology. This essay aligns with B-school themes on innovation, inclusion, and global competitiveness.
🕒 Effective Planning and Writing
- Planning: 5 minutes
- Writing: 20 minutes
- Review: 5 minutes
Preparation Tips:
- Research case studies like the Sand Dollar and Digital Yuan.
- Use the FACT framework: Figures, Authority, Cases, Trends.
💡 Introduction Techniques for Essays
- Contrast Approach: “While traditional banking systems leave approximately 1.4 billion people unbanked globally, digital currencies offer a scalable solution to bridge this gap.”
- Global Context: “With over 130 countries exploring CBDCs, the debate is no longer about if, but how, governments should lead this transformation.”
📊 Structuring the Essay Body
🏆 Paragraph 1: Achievements
- Highlight financial inclusion and cost savings with examples from the Bahamas and China.
⚠️ Paragraph 2: Challenges
- Discuss cybersecurity risks and mistrust using Nigeria’s eNaira.
🔮 Paragraph 3: Future Outlook
- Focus on public-private partnerships and global collaboration for scalable implementation.
📈 Analyzing Successes and Shortcomings
Key Achievements
- Financial Inclusion: The Bahamas’ Sand Dollar increased financial access in remote areas, targeting 90% coverage, demonstrating the potential for CBDCs to bring banking services to underserved populations globally.
- Digital Payment Growth: India has embraced digital transactions at an unprecedented scale, with UPI processing over 11.5 billion transactions monthly. A CBDC could further streamline such systems by reducing intermediaries.
- Cost Efficiency: CBDCs eliminate the need for cash printing and distribution, significantly reducing operational costs for central banks.
- Transparency and Security: CBDCs facilitate transparent financial transactions, reducing tax evasion and fraud risks through digital records.
Ongoing Challenges
- Cybersecurity Risks: The 2022 AIIMS cyberattack in India highlighted vulnerabilities in digital ecosystems. CBDCs require fortified blockchain technology and strong cybersecurity frameworks to gain trust.
- Digital Literacy Barriers: With 47% of adults globally lacking financial literacy, a significant portion of potential users may struggle to adopt CBDCs without extensive education initiatives.
- Privacy Concerns: Critics argue that CBDCs could enable excessive government surveillance, undermining individual privacy—a key concern voiced by civil liberties groups worldwide.
🌍 Global Context
- China’s Digital Yuan: While successful in onboarding over 260 million users, China’s model has faced criticism for its lack of privacy and state control over transactions.
- Nigeria’s eNaira: Poor adoption rates illustrate the importance of building trust, creating adequate infrastructure, and addressing user concerns to ensure CBDC success.
- Estonia as a Benchmark: Known for its robust digital infrastructure, Estonia’s e-governance and digital ID systems provide valuable lessons in securing citizen trust and engagement in digital ecosystems.
📄 Concluding Effectively
- Balanced Approach: “CBDCs hold immense promise, but inclusive adoption and robust safeguards are critical to their success.”
- Global Comparison: “Lessons from the Digital Yuan and eNaira emphasize the need for cautious yet ambitious adoption strategies.”
🔧 Recommendations for Sustainable Progress
- Strengthen cybersecurity with blockchain.
- Launch mass financial literacy campaigns.
- Pilot projects in underserved regions before scaling.
✍️ Sample Short Essays
1. Balanced Perspective:
“CBDCs can revolutionize financial systems, but their success hinges on addressing digital literacy and privacy concerns.”
2. Solution-Oriented:
“By integrating CBDCs with fintech and launching targeted literacy campaigns, governments can achieve both inclusion and innovation.”
3. Global Comparison:
“From China’s success to Nigeria’s challenges, the roadmap for CBDCs lies in learning, adapting, and implementing inclusively.”