Reserve Bank of India (RBI) Deputy Governor T Rabi Sankar said that stablecoins do not serve any meaningful purpose in the financial system and that their claimed functions can be performed more effectively by central bank digital currencies (CBDCs). He made the remarks while speaking at the Mint Annual BFSI Conclave 2025 on December 12, 2025, in Mumbai. In his keynote address, Sankar presented a wide-ranging critique of cryptocurrencies and stablecoins, while outlining why sovereign-issued digital money offers a safer alternative.
At the outset, Sankar traced the evolution of money, arguing that although its form has changed with technology, its core attributes have remained constant. Money, he said, represents value that users trust, either through intrinsic worth or a promise to pay. Over time, he noted, the most stable forms of money have been issued by sovereigns rather than private entities. As a result, modern money derives credibility from its fiat nature, with both physical currency and digital bank deposits ultimately anchored to the central bank.
He also underlined the “singleness” of money, where different forms of money remain denominated in a single unit and exchangeable at par, with settlement taking place in central bank money. Against this background, Sankar said cryptocurrencies depart from these principles, as they do not represent intrinsic value or a promise to pay.
What are stablecoins?
Stablecoins are a category of cryptocurrency that maintain a stable value by pegging themselves to a reference asset, most commonly a sovereign fiat currency such as the US dollar. In his speech, Sankar described stablecoins as crypto tokens where the issuer holds reserves, either financial or other assets, to keep their price stable relative to the underlying asset.
Unlike unbacked cryptocurrencies such as Bitcoin, stablecoins aim to reduce price volatility and operate as currency-like instruments. However, Sankar noted that it is often unclear whether stablecoin issuers make an unconditional promise to redeem tokens at par value, raising questions over whether they constitute a true liability of the issuer. Moreover, he said stablecoins represent private money rather than sovereign fiat, which weakens the “singleness” of money within an economy.
Globally used examples include dollar-pegged stablecoins such as Tether (USDT) and USD Coin (USDC), which users widely rely on for settlement and trading within crypto markets. Asset-backed variants also exist, including gold-backed stablecoins such as PAX Gold (PAXG), where each token represents ownership of a specified quantity of physical gold.
Sankar on Benefits of Stablecoins
The deputy governor said stablecoins are often presented as faster and cheaper alternatives, particularly for cross-border transfers. However, he argued that this claim does not apply in the domestic context, where India already operates real-time payment systems such as UPI that…
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