The Reserve Bank of India (RBI) has raised alarms regarding the potential risks associated with stablecoins, emphasizing their threat to India”s monetary sovereignty and financial stability. During a speech delivered on December 13, 2025, RBI Deputy Governor T Rabi Sankar articulated these concerns, arguing that the growing prevalence of private digital currencies globally does not warrant their inclusion in India”s financial ecosystem.
Sankar pointed out that stablecoins could undermine public confidence in the domestic currency, potentially eroding trust in the entire financial system. He noted that India already benefits from efficient digital payment systems like the Unified Payments Interface (UPI), Real-Time Gross Settlement (RTGS), and the National Electronic Funds Transfer (NEFT), which ensure fast, secure, and cost-effective transactions on a large scale. Given the effectiveness of these established systems, the integration of stablecoins into the economy is deemed unnecessary, especially when considering the broader financial and social risks they may introduce.
While acknowledging the innovative aspects of blockchain technology and tokenization, Sankar underscored that central bank digital currencies (CBDCs) present a safer alternative. CBDCs, being government-backed digital tokens, come with sovereign guarantees and are regulated within the monetary framework. They offer similar technological advantages without the inherent risks linked to private stablecoins, including programmability, atomic settlement, and reduced barriers to cross-border transactions. Sankar elaborated that CBDCs function similarly to physical cash, providing multi-layer anonymity for smaller transactions, thus ensuring user convenience while safeguarding high-value transfers and preventing risks associated with disintermediation for banks.
Much of the appeal of stablecoins stems from their promise of quicker and more affordable remittances. However, Sankar asserted that CBDC corridors could deliver the same benefits, and India has the opportunity to shape such interoperable arrangements with other emerging markets. He emphasized that interlinking fast payment systems, including India”s recent UPI connections with various jurisdictions, aligns with G20 objectives for faster, more transparent, and cost-effective cross-border payments. Over time, such advancements are expected to diminish reliance on private digital currencies.
In response to suggestions that regulatory frameworks could mitigate the risks posed by stablecoins, Sankar posed a critical question about whether society should adopt an inherently risky and largely untested financial instrument. He referenced the Bank for International Settlements” (BIS) Annual Economic Report of 2025, which outlines the choice between leveraging proven, reliable solutions to enhance the monetary system or depending on unverified private currencies with uncertain societal repercussions. He emphasized that stablecoins lack intrinsic monetary value, their usefulness is not guaranteed, and they carry significant risks.
As India navigates its monetary policy landscape, Sankar highlighted that the country stands at a “policy turning point.” He articulated four fundamental principles that should guide the future of India”s monetary policy: preserving faith in the domestic currency and payment system; maintaining monetary sovereignty and financial stability; responsibly promoting innovation through CBDCs and interoperable payment systems; and ensuring that innovation strengthens, rather than undermines, the regulated financial framework.
