At the recent Mint Annual BFSI Conclave 2025, RBI Deputy Governor T. Rabi Sankar urged a transition toward Central Bank Digital Currencies (CBDCs) as a safer and more stable financial tool compared to stablecoins, which he warned could jeopardize monetary stability. Highlighting India’s robust payment systems, Sankar made a compelling case for why the country should prioritize CBDCs over private digital alternatives.
The Fundamental Flaws and Risks of Stablecoins
In his address, Sankar dissected the core inadequacies of stablecoins, asserting that they fail to fulfill the essential characteristics of what defines money. Unlike traditional fiat currencies, stablecoins lack a single trusted source and their values are not inherently stable, leading to substantial concerns regarding their ability to safeguard monetary policy and financial integrity.
“Stablecoins can undermine trust in the currency and finance system. India already benefits from a payments landscape that is highly efficient, reliable, and robust,”
stated Sankar, underscoring the risks these private digital currencies pose to India’s economic stability. He emphasized that their purported advantages, such as inclusion within the financial system, are not unique nor unequivocally substantiated. Instead, many of these benefits remain speculative.
CBDCs: A Technologically Advanced Public Alternative
Contrasting stablecoins with CBDCs, Sankar elaborated on how CBDCs encapsulate all attributes necessary for a secure and reliable monetary system. By being anchored within the traditional financial infrastructure, they facilitate functionalities like programmability and atomic settlement which can significantly diminish cross-border transaction frictions.
“They can perform all the functions stablecoins claim to offer, such as programmability, atomic settlement, and lower cross-border frictions, while being fully anchored within the existing financial system,”
noted Sankar, insisting that adopting CBDCs must focus on making them feel similar to cash. He supported implementing tiered anonymity for low-value transactions to ensure user comfort and maintain safeguards for larger sums, effectively addressing privacy concerns and enhancing user trust.
India’s Efficient Payment Landscape Reduces Need for Stablecoins
In the current digital age, India’s payment ecosystem—including services like the Unified Payments Interface (UPI), Real-Time Gross Settlement (RTGS), and National Electronic Funds Transfer (NEFT)—stands as a testament to technological advancement. These frameworks already provide millions of users with fast, cost-effective, and secure payment options.
“This leaves little justification for their (stablecoins’) integration into the financial system, even before considering the broader risks they pose. India’s policy on stablecoins must be driven by domestic priorities,”
emphasized Sankar. This sentiment reflects a national stance that prioritizes preserving the integrity of India’s financial architecture over adopting potentially disruptive financial technologies.
Future Pathways: Cross-Border Solutions and Global Leadership
As the world increasingly moves toward digital currencies, the cross-border capabilities of CBDCs can replace stablecoins in facilitating seamless international transactions. Sankar pointed to the potential for establishing bilateral and multilateral CBDC corridors and linking fast payment systems with partner jurisdictions as smarter strategies to achieve the efficiency stablecoins promise.
“This is an area where India can play a shaping role, by helping build the case for interoperable CBDC arrangements among emerging markets and beyond,”
he remarked. By spearheading these efforts, India can not only safeguard its own monetary sovereignty but also position itself as a global leader in digital financial integration.
Preserving Economic Safety in a Digital Age
Sankar’s remarks resonate with a growing concern about the unchecked nature of stablecoins, which he described as instruments with intrinsic risks that could undermine the financial system. He captured the essence of this challenge by asking,
“Can we afford to experiment with the foundations of global monetary and financial stability?”
This question invites deeper reflection on whether reliance on inherently unstable private currencies is wise in an era where financial technologies rapidly evolve.
Ultimately, the choice remains clear: countries can either strengthen their monetary systems using established foundational principles of trust or risk repeating historical lessons with potentially severe consequences. As India moves forward, emphasizing CBDCs alongside an already efficient payment framework appears to be a prudent pathway that prioritizes stability and user trust in an ever-evolving digital landscape.
