Mumbai: Reserve Bank of India (RBI) Deputy Governor T Rabi Sankar on Thursday warned that stablecoins pose a significant risk to India’s policy sovereignty, even though they may be asset-backed. He hinted that the country is unlikely to introduce stablecoins, reinforcing the central bank’s consistent skepticism toward privately issued digital currencies.
Speaking at a Business Standard event, Sankar said that while the RBI is closely monitoring liquidity conditions, it will ensure that there is adequate money supply for productive economic activity.
“Economic activity will not suffer because of liquidity reasons,” he assured.
Sankar drew a clear distinction between stablecoins, cryptocurrencies like Bitcoin, and central bank digital currency (CBDC), stating that stablecoins do not offer any advantages over a digital rupee.
“We are very clear in our mind that stablecoins do not serve a purpose that cannot be done better with CBDC. Introducing stablecoins would create a lot of policy concerns and issues that are best avoided,” he said.
Stablecoins Could Undermine Monetary Sovereignty
While acknowledging that stablecoins are asset-backed and less volatile than cryptocurrencies, Sankar emphasized their macroeconomic risks for emerging economies.
“Because they are backed, the value of stablecoins is not in question. But the risk to an economy like India is that they could replace your currency and threaten policy sovereignty,” he cautioned.
He reiterated the RBI’s long-held stance that cryptocurrencies and private digital assets do not serve any legitimate economic function and therefore should not be part of India’s monetary system.
Cautious Progress on Digital Rupee
Discussing the progress of India’s Central Bank Digital Currency (CBDC) — the e-rupee, introduced in pilot form two years ago — Sankar said the RBI remains deliberate and measured in its approach.
“India will not move fast. Over 70 countries have launched or are piloting CBDCs, but everyone is ‘hastening slowly’,” he observed.
So far, India has recorded over 10 crore CBDC transactions, according to Sankar. He highlighted the potential benefits of CBDC, including programmability (which allows targeted or conditional payments) and the ability to make cross-border transactions cheaper and more efficient.
Rupee Internationalisation and Capital Flows
On the issue of rupee internationalisation, Sankar described it as a gradual, enabling process that would benefit Indian trade over time.
“It’s more of an enabling facility that will deliver results over the long term,” he said.
He clarified that India will not move toward full-scale capital account convertibility in a single leap but will liberalise gradually. Pointing to the draft measures on external commercial borrowings (ECBs) released on Wednesday, Sankar said the RBI’s current policy focus is on attracting capital inflows.
“Going forward, inflows of capital are the first priority from a policy measures perspective,” he added.
RBI’s Broader Digital and Policy Outlook
The RBI’s message remains consistent: while it welcomes financial innovation, it prioritises monetary stability and policy independence over private digital asset adoption.
By ruling out stablecoins and reiterating faith in the CBDC framework, the central bank continues to signal that India’s digital currency future will be fully sovereign and centrally governed.