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Stablecoins pose threat to India's economy, RBI governor warns

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Stablecoins pose threat to India's economy, RBI governor warns

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India's economy appears to be at risk. Reserve Bank of India Governor Shaktikanta Das warns that the introduction of digital assets poses a serious threat to its stability.

Speaking at the G30 International Banking Seminar in Washington, Das described stablecoins as "private money" used by issuers seeking to dominate the global payments ecosystem. According to the RBI governor, the risks associated with stablecoins far outweigh their benefits and threaten the stability of the Indian economy. He believes that the safest option for citizens would be the digital rupee, which is backed by the Indian government of India and ensures guaranteed transactions. The digital rupee stands in stark contrast to private stablecoins, which remain shrouded in regulatory uncertainty, Das noted.

The official further mentioned that pilot projects for the government-backed stablecoin in India have received positive feedback. Besides, he revealed the central bank’s plan to integrate its digital currency with India's unified payments system, which currently processes around 500 million transactions daily.

Notably, in December 2022, India launched a pilot program for the digital rupee. Sixteen banks participated in this initiative, exploring various use cases for the token, including offline payment capabilities. The regulator is expected to gradually roll out the digital rupee, ensuring thorough testing of its functionality and security before a full-scale launch.

Das' comments came amid reports that India might ban the use of private cryptocurrencies, including stablecoins. Earlier, the official described virtual currencies as dangerous speculative instruments, citing their high volatility.

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