Reserve Bank of India (RBI) Deputy Governor T Rabi Sankar said stablecoins lack the basic attributes of money and pose significant risks to monetary stability, effectively ruling out their integration into India’s financial system.
“Stablecoins fail to satisfy the two defining features of modern money, viz., (i) money as fiat and (ii) singleness of money,” Sankar said at the Mint Annual BFSI Conclave 2025 in Mumbai on December 12, 2025. “It is possible that in a stablecoin system, there would be hundreds, or more, of currencies in an economy making any such system inherently unstable.”
The RBI official dismissed the benefits claimed by stablecoin proponents, noting that India’s existing payment infrastructure already provides efficient solutions. “In the domestic space, real-time fast payment systems such as UPI already enable fast, low-cost, and reliable payments, and there is no reason to believe that stablecoins would be superior from the point of view of cost or speed or reliability,” he said.
Sankar identified multiple risks that stablecoins pose to India’s financial system. “Widespread adoption of stablecoins would undermine Central banks’ ability to control money supply and interest rates,” he said, adding that they could lead to currency substitution and dollarisation in emerging markets.
Credit conundrum
The banking sector faces particular threats from stablecoin adoption. “To the extent stablecoins replace bank deposits, banks would lose their role in financial intermediation,” Sankar said. “This would result either in a rise in cost of credit as banks lose access to low-cost deposits, or banks having to depend on the Central bank to provide the liquidity required to fund credit.”
The RBI deputy governor also highlighted the loss of seigniorage income to governments. “Seigniorage, which is inherently a sovereign revenue arising from the issuance of fiat money by the Central bank, is thus diverted to private operators, often located outside the home jurisdiction, if stablecoins are dominated in a foreign currency,” he said.
Instead of stablecoins, Sankar advocated for Central Bank Digital Currencies as the superior alternative. “CBDCs are digital tokens like stablecoins yet they are inherently superior since they satisfy all the attributes that money should have – fiat, single, trusted and representing value – and do not pose many of the risks associated with stablecoins,” he said.
He called for India to focus on four key principles: preserving trust in the national currency; safeguarding monetary sovereignty; encouraging responsible innovation through CBDCs, and ensuring innovation strengthens the regulated financial system.
“Do stablecoins serve a purpose? It seems to me that they do not; at any rate, they do not serve a purpose that cannot be served better by fiat money,” Sankar concluded.
Published on December 12, 2025
