Stablecoins Can Replace Real Money? RBI Explains the Hidden Risk

India’s central bank raises fresh doubts about the safety of private digital coins.

Ever thought a coin on your phone could act like the rupee in your pocket? That’s the question many ask after the RBI’s December 2024 Financial Stability Report. The report said private stablecoins could hurt India’s financial system and the bank’s control over money.

The RBI recently reiterated that private stablecoins cannot serve as legal tender, emphasising the risk that widespread use of such tokens could undermine the rupee and the central bank’s monetary policy. According to an official press release, the RBI has “not given any licence/authorisation to any entity or company to operate virtual currencies”.

Why Does RBI Think Stablecoins Are a Threat to the Rupee?

The RBI explanation on stablecoin risks was simple. These tokens, even if backed, might disturb price control and weaken the rupee. The report called stablecoins “a risk to monetary authority.”

Stablecoins are digital coins pegged to real assets like gold or dollars. They move fast online, but no one in India officially regulates them. The RBI also reminded people that no stablecoin is legal tender.

Here’s a quick look at how they differ from real money.
 

That gap, the bank says, can turn into a hole in crisis. Sometimes what looks stable is only calm before trouble.

Could Stablecoins Shake India’s Financial System?

The RBI warning about cryptocurrency stability wasn’t random. The BIS 2025 report also said stablecoins “perform poorly as money.” It’s because their reserves are often unclear. If one large coin fails, digital panic can follow fast.

Fewer people keeping savings in banks could shrink deposits. Loans become costly. Liquidity dries up. The RBI listed several such hidden dangers of digital stablecoins.
 

That’s the worry. Once confidence slips, it’s hard to pull back. Everyone chases safety too late.

Is India’s Digital Rupee the Safer Alternative?

The RBI’s current stand connects with its earlier move to introduce the Digital Rupee Pilot in 2022. That project aimed to provide a safe digital currency fully managed by the central bank.

According to LoansJagat, digital rupee transactions reached about ₹10.16 billion, showing that people are gradually adopting the official digital version. This shows what the RBI wants, innovation without losing control over monetary policy.

Conclusion

The Finance Ministry’s 2025 note supported RBI’s stand. It said private coins cannot replace state money. Back in 2018, the RBI had stopped unlicensed wallets for similar reasons.

Some private banks see opportunity if INR-backed stablecoins get approval. Public banks are less convinced. For them, the rupee under RBI remains the anchor. Different voices, but one shared fear, losing monetary balance.
 

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