Stablecoins Under Scrutiny as Indian Central Bank Deputy Warns of Economic Risks

The Deputy Governor of the Reserve Bank of India warned that stablecoins could pose significant risks to emerging market economies, noting that unchecked adoption may undermine key macroeconomic policy tools.

He stated that stablecoins could weaken capital flow management measures, while their role in transaction-based economies remains relatively limited despite growing global attention.

The official highlighted several risks, including increased dollarization, potential disruptions to monetary policy, and currency substitution, all of which could threaten financial stability.

According to the deputy governor, stablecoins may also drive higher credit costs and lead to a loss of monetary sovereignty, particularly when foreign-issued stablecoins dominate domestic markets.

He emphasized that India’s approach will continue to be guided by caution, signaling that the central bank remains wary of widespread stablecoin adoption without robust regulatory safeguards.