RBI Highlights Risks Of Stablecoins, Says India Must Prioritise Nation-First Interests

The Reserve Bank of India (RBI) has warned that Stablecoins could pose a serious threat to the country’s monetary sovereignty, financial stability, as well as public trust in the domestic currency. 

RBI Deputy Governor T Rabi Sankar said at a speech on December 13, 2025 that despite the globally increasing number of private digital currencies, India does not have any reason to include Stablecoins into its financial systems.

Stablecoins May Erode Confidence

Sankar highlighted that Stablecoins would lead to a loss of confidence in the home currency and erosion of faith in the country's financial system.

He said India already has Unified Payments Interface (UPI), Real-Time Gross Settlement (RTGS), and National Electronic Funds Transfer (NEFT) as highly efficient gateways for digital payments, which provide for speed, safety, and lower cost on a large scale. Given the efficacy of these systems, he added, there is no need to integrate Stablecoins into the economy, before even considering their larger set of financial and social risks.

CBDCs Offer Safer Alternatives

Though appreciating the innovative drivers of blockchain and tokenisation, Sankar emphasised that central bank digital currencies (CBDCs) offer comparable technological benefits with no inherent risks of private stablecoins.

CBDCs are digital tokens backed by the government and, therefore, carry sovereign guarantee, and remain regulated in the monetary framework. They can also support programmability, atomic settlement, and have lower frictions in cross-border transactions since they stay within the formal regulatory framework.

Sankar explained that the functionality of CBDCs is almost the same as that of physical money with multi-layer anonymity for small value transactions. This would ensure convenience for users, safeguard high value traffic, and prevent risks of disintermediation for banks.

CBDCs Can Replace Stablecoin Benefits

Much of the attraction for Stablecoins lies in claims of quicker and less expensive remittances. Sankar said the same benefit accrues with bilateral or multilateral CBDC corridors. India can contribute to the design of such interoperable CBDC arrangements with other emerging markets to make cross-border payments more efficient without dependence on private digital currencies. 

He further highlighted how interlinking fast payment systems, including India's recent UPI linkages with various other jurisdictions, aligns with the G20 objective for quicker, more affordable, and more transparent cross-border payments. Over time, such measures will decrease the need for private digital tokens. 

Inherently Hazardous, Completely Untested

In answer to claims that regulation can reduce the risks of Stablecoins, Sankar said that the real issue is whether society should adopt something which is risky and untested at scale.

He referred to the Bank for International Settlements’ (BIS) Annual Economic Report of 2025, which presents the choice between using proven and trusted solutions to strengthen the monetary system or relying on untested private currencies with uncertain societal implications.

Sankar pointed out that Stablecoins do not possess the intrinsic value of money, their usefulness is neither unique nor guaranteed, and they possess significant risks. 

India's Policy Crossroads

He further said that India is at a “policy turning point”. 

“For the future monetary policy of the country, it must adhere to four principles: faith in the domestic currency and the payment system should be preserved, the country’s monetary sovereignty and financial stability should be maintained, innovation should be promoted responsibly through CBDCs and interoperable payment systems, and innovation should strengthen, not undermine the regulated financial system,” he added.