As private stablecoins continue to spread through global finance, India’s central bank is pushing back hard.
Rather than allowing privately issued digital money to grow into a core payment layer, the Reserve Bank of India is urging governments to anchor the future of digital payments around central bank digital currencies instead.
Key Takeaways
The RBI is urging countries to prioritize central bank digital currencies over private stablecoins.
It warns that stablecoins could introduce new financial stability risks during market stress.
The central bank says CBDCs can deliver efficiency and instant settlement with sovereign backing.
The message, laid out in the RBI’s latest financial stability report, reflects a deeper concern about who ultimately controls trust in money. From the RBI’s perspective, allowing stablecoins to expand unchecked risks weakening the role of sovereign money, especially during periods of market stress when confidence can evaporate quickly.
Why the RBI sees private stablecoins as a risk
The central bank’s argument goes beyond crypto volatility. Stablecoins, even those designed to track fiat currencies, are still liabilities of private issuers. That means their stability depends on reserve quality, governance, and market confidence – all of which can come under pressure during financial shocks.
The RBI warned that this structure could create new channels for instability, particularly if large-scale redemptions occur or if reserve assets lose liquidity. In such scenarios, privately issued digital money could amplify stress rather than absorb it.
By contrast, the RBI believes money should ultimately settle in risk-free central bank liabilities. In its view, that principle – sometimes referred to as the “singleness of money” – is critical to maintaining a stable financial system.
CBDCs as the foundation of digital payments
Rather than rejecting innovation, the RBI argues that central bank digital currencies can deliver everything stablecoins promise, but with fewer risks. According to the report, CBDCs can support instant settlement, programmability, and low-cost payments while retaining the credibility of sovereign backing.
The bank positioned CBDCs as the natural anchor for next-generation payment infrastructure, capable of modernizing transactions without handing monetary control to private issuers. This stance also aligns with the RBI’s broader emphasis on protecting monetary sovereignty as digital finance evolves.
India’s cautious path on crypto
India’s government has signaled openness to studying stablecoin regulation, but the RBI continues to take a more conservative line on crypto assets as a whole. The central bank is expected to play a decisive role in shaping how digital currencies are treated domestically, particularly as global standards begin to emerge.
That caution stands in contrast to trends elsewhere. Across the U.S., Europe, and parts of Asia, banks and payment firms are increasingly experimenting with stablecoins to speed up transfers and reduce reliance on legacy financial rails.
