India’s central bank, the Reserve Bank of India (RBI), is urging the world to focus on central bank digital currencies (CBDCs) instead of stablecoins, which it sees as risky for financial stability and monetary control.
In its annual financial stability report released Dec. 31, the RBI warned that while stablecoins are growing in popularity, they fall short of key monetary principles. Unlike CBDCs, stablecoins don’t fully preserve the integrity of a country’s money system and can weaken the effectiveness of domestic monetary policy.
“Stablecoins have become a big part of the crypto ecosystem, but they carry risks because of their vulnerabilities,” the RBI said. “They are an alternative form of money, but they don’t meet the core requirements of a sound monetary system—singleness, elasticity, and integrity.”
CBDCs, on the other hand, are issued and guaranteed by central banks, giving them credibility and stability. They act as the ultimate settlement asset and can offer similar—or even better—benefits than stablecoins, including faster, cheaper, and secure payment systems.
The RBI also pointed out that private stablecoins, often issued by companies or fintech firms, have faced failures where they lost their peg to underlying currencies. This creates regulatory concerns and could lead to “currency substitution,” which would weaken a country’s monetary control. Features like low costs, cross-border use, and pseudonymity—often praised by users—are viewed by the RBI as additional risks.
India has been developing its digital rupee since 2022. Early pilots involved several banks, and the currency was later made available to the public through selected banking channels. Adoption, however, has been slow. By June 2025, only about 1 million retail transactions had taken place, even after incentives and partial salary payments were introduced using the CBDC.
Globally, only three CBDCs have been fully launched, while stablecoins continue to grow rapidly. Some major economies, including the U.S. and Europe, have introduced regulations to support stablecoin use, sparking interest from financial institutions looking to build fully compliant digital payment solutions.
The RBI’s message is clear: central banks should lead the way with CBDCs, not private stablecoins, to maintain trust in money and ensure long-term financial stability.
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