RBI Flags Stablecoins As Existential Threat, Doubles Down On CBDC Ambitions

Central banks are drawing battle lines in the digital currency war—and private stablecoins are public enemy number one.

The Regulatory Pushback

Watchdogs aren't just watching anymore. They're building. The perceived threat from dollar-pegged tokens and algorithmic alternatives has shifted from theoretical risk to urgent priority. Why? Stablecoins bypass traditional banking channels, challenge monetary sovereignty, and—let's be honest—threaten the very levers central bankers love to pull.

The CBDC Counter-Offensive

Enter the digital rupee, or whatever local branding gets slapped on it. This isn't innovation for innovation's sake—it's a defensive play. State-backed digital currencies promise programmable money, instant settlements, and, crucially, a government-controlled ledger. They offer the efficiency of crypto without the pesky decentralization. A classic case of 'if you can't beat 'em, regulate 'em into obsolescence.'

The Finance Sector's Cynical Calculus

Here's the quiet part they're not saying out loud: a successful CBDC could make fractional reserve banking look like a relic. Why hold deposits at a commercial bank when you can hold risk-free digital cash directly with the central bank? The entire credit-creation engine sputters. But of course, that conversation gets tucked neatly behind 'financial stability' and 'consumer protection' talking points. Nothing protects profits like a government monopoly.

The bottom line? The race for the future of money is on. And it's not being run in crypto exchanges—it's being orchestrated in marble hallways. The winner won't be the most innovative protocol, but the one that controls the rulebook.

In Brief

• While stablecoins reach $307 billion in 2025, India adopts a radically opposite stance.
• The Indian central bank (RBI) rejects stablecoins and defends its own digital currency, the CBDC.
• According to the RBI, only CBDCs guarantee financial stability, confidence in currency, and monetary sovereignty.
• The institution warns of systemic risks that stablecoins could cause, especially during periods of economic stress.

The Official Position of the Indian Central Bank

In its financial stability report published at the end of December 2025, the Reserve Bank of India (RBI) takes a clear stance: CBDCs (central bank digital currencies) should be favored over stablecoins issued by private actors.

The institution considers CBDCs as the foundation for the future national and international monetary system. According to the report, the sovereign digital currency alone can guarantee “the uniqueness of currency and the integrity of the financial system”. It must remain “the ultimate settlement asset” and serve “as an anchor for confidence in the currency”.

These statements fit into a vision of strong monetary sovereignty, in which any delegation of currency issuance to non-state entities WOULD lead to imbalances.

The RBI also issues an explicit warning against the risks associated with stablecoins, which it perceives as a potential threat to financial stability, especially during periods of market stress. It emphasizes that states must carefully evaluate “the risks associated” and adapt their monetary policy accordingly.

Here are the key points highlighted by the Central Bank :

• Stablecoins could introduce new channels of vulnerability, notably by bypassing traditional monetary circuits ;

• Their large-scale use risks eroding central banks’ ability to maintain financial stability by fragmenting the role of sovereign currency ;

• They lack the institutional backing and credibility that CBDCs enjoy, being issued directly by a national monetary authority ;

• Their unregulated growth could disrupt the transmission mechanisms of monetary policy, reducing the effectiveness of traditional tools.

In summary, the Indian central bank does not simply favor CBDCs. It considers that strict regulation, even marginalization of private stablecoins, is essential to protect the current monetary architecture.

A Booming Stablecoins Market Amid Slowed Global CBDC Adoption

As the Indian central bank toughens its stance, stablecoins are experiencing rapid growth worldwide, notably driven by their adoption in cross-border transfers.

According to DefiLlama, their capitalization ROSE from $205 to $307 billion in 2025, evidence of their perceived utility in the financial system. On-chain data indicate this growth relies largely on the interest of many American, European, and Asian financial institutions, attracted by the speed and low cost of these assets compared to traditional financial infrastructures.

Yet, despite the market’s enthusiasm for these private instruments, only three CBDCs are currently active worldwide: those of Nigeria, the Bahamas, and Jamaica, according to data from the Atlantic Council.

Forty-nine countries are in the pilot phase, twenty are currently developing their technology, and thirty-six others are only at the research stage. This gap between the market momentum for stablecoins and the slow development of CBDCs highlights a paradox: the Indian central bank advocates for a solution still largely experimental, even as real uses lean towards private solutions.

The stablecoins market reaches a record of $310.11 billion, but India maintains its stance: priority for state currency. This strategic choice reflects a will for strict monetary control facing an innovation still considered unstable. A posture that could redefine the balance between financial sovereignty and digital future.

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