RBI DG Sankar warns stablecoins threaten monetary sovereignty, backs CBDCs

• RBI Deputy Governor T Rabi Sankar raised concerns over stablecoins, citing risks to monetary sovereignty, financial stability, and banking systems.
• Sankar stated stablecoins lack core attributes of modern money (fiat backing, singleness) and are structurally unsuitable to anchor a financial system.
• He warned stablecoins could lead to currency substitution, weaken monetary policy, and undermine bank-led credit intermediation, especially in emerging economies.
• The RBI DG also highlighted the risk of losing seigniorage income to private, often overseas, stablecoin issuers.
• India should promote Central Bank Digital Currencies (CBDCs) instead, as they combine digital tokens with sovereign backing, monetary stability, and regulatory oversight.

Why It Matters: RBI warns stablecoins threaten India's financial stability and monetary sovereignty.