The Reserve Bank of India (RBI) has issued a stark warning, stating that the broad acceptance of privately issued stablecoins could present serious dangers to the nation's financial stability and its sovereign control over monetary policy. The central bank's caution came in its latest Financial Stability Report (FSR) released on Wednesday, December 31, 2025.
RBI's Cautious Stance on Crypto and Stablecoins
In the report, the RBI reiterated its careful position regarding crypto assets, which includes fiat-backed digital tokens known as stablecoins. The bank emphasized the critical need to prioritize sovereign digital infrastructure to protect India's monetary sovereignty amidst global financial changes. The RBI pointed out that while stablecoins have seen increased interest and rapid issuance growth in recent years, their overall market size is still small compared to the wider cryptocurrency market.
However, the central bank argued that the potential risks from stablecoins to macro-financial stability currently outweigh their claimed benefits. The RBI noted that in their relatively short existence, stablecoins have demonstrated volatility and susceptibility to shocks in market confidence, alongside inherent structural weaknesses.
Why Stablecoins Are Seen as a Threat
The RBI elaborated that wider adoption of these private digital currencies could create new pathways for financial stability risks, especially during times of economic stress or market turbulence. The core of the concern lies in the nature of money itself. The RBI firmly stated that central bank money is fundamental to preserving the "singleness" of money and the integrity of the entire financial system.
It must continue to be the ultimate asset for settlement and should remain the bedrock of public trust in currency. Privately issued stablecoins, by existing outside this sovereign framework, could fragment this trust and challenge the central bank's ability to manage the economy effectively.
The CBDC Alternative: Safer, Sovereign Digital Money
Presenting a solution, the RBI highlighted that Central Bank Digital Currencies (CBDCs) can deliver all the advantages that stablecoins purport to offer. These benefits include greater efficiency, programmability of payments, and instant settlement of transactions.
Crucially, a digital rupee (India's CBDC) would provide these features backed by the full credibility and safety of central bank money. Therefore, the RBI is strongly advocating that countries around the world should focus their efforts on developing and deploying CBDCs instead of encouraging privately issued stablecoins.
This approach, according to the RBI, is essential to maintain foundational trust in money, safeguard financial stability, and build the next-generation payments infrastructure that is faster, more cost-effective, and secure. The central bank's message is a clear call for global coordination to ensure that the future of digital finance is anchored by sovereign institutions rather than private entities.
