Reserve Bank of India believes stablecoins pose threat to policy sovereignty, supports CBDCs instead


Share:
  • Reserve Bank of India's Deputy Governor voices support for CBDCs over stablecoins.
  • While Tether and USDC offer insight into the state of the crypto market, economies like India prefer stable solutions like CBDCs for their policy sovereignty.
  • Rabi Sankar believes the use of large stablecoins pegged to the USD poses the risk of dollarization.

The Reserve Bank of India (RBI) voiced again its positioning against the cryptocurrency industry, this time focusing on the issues of stablecoins. T Rabi Sankar, Deputy Governor at the RBI, said stablecoins pegged to the US Dollar increase the risk of dollarization.

Also read: Tether, USDC signal incoming price rally, while Circle CEO builds a case for China’s CBDC

India’s central bank prefers CBDC over stablecoins like Tether and USDC

The RBI Deputy Governor commented on the central bank’s stance on stablecoins and CBDCs in a recent event, as reported by local news platform the Hindu. Sankar explained that stablecoins are linked to underlying fiat currencies, the US Dollar in the case of USDT, and this is only beneficial to certain economies.

According to Sankar, for an economy like India that seeks to preserve its policy sovereignty, CBDCs are a better “stable solution” than stablecoins. The RBI official says that, when using stablecoins there is a risk of dollarization, which can be mitigated by developing currencies (CBDCs) that avoid the transfer of seigniorage to private issuers.

Sankar said:

We have to be very careful about allowing these sorts of instruments. Stablecoins can provide some of this but they are only useful to a few countries that are linked. From the past experience in other countries, it is an existential threat to policy sovereignty.

India is a part of the G20 forum for emerging economies. Several countries in the forum believe that stablecoins pose a threat to their monetary policy sovereignty and G20 countries have been calling for stricter regulation for digital assets. 

Stablecoins have been considered by market pundits a reliable indicator of the state of the crypto ecosystem and considered as metrics that help determine the direction of Bitcoin and altcoin prices.

Anomalies were identified in the on-chain activity of Tether and USDCoin recently, pointing at incoming volatility in Bitcoin and crypto prices. A change of stance from emerging economies and G20 nations like India could influence the adoption of stablecoins in the long term.


Like this article? Help us with some feedback by answering this survey:



Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Join Telegram

Follow us on Telegram

Stay updated of all the news

Join Telegram

Recommended content


Follow us on Telegram

Stay updated of all the news

Join Telegram

Recommended Content

Editors’ Picks

PEPE price inches closer to 2024 peak with top crypto exchanges teasing PEPE memes on X

PEPE price inches closer to 2024 peak with top crypto exchanges teasing PEPE memes on X

PEPE’s social dominance and relevance have been increasing since February 20. This week, top cryptocurrency exchanges have shared PEPE and related memes in tweets on their official X handle. 

More PEPE News

SEI, Omni Foundation propose standard to unify Ethereum NFTs

SEI, Omni Foundation propose standard to unify Ethereum NFTs

SEI and Omni Foundation could help NFTs across the Ethereum ecosystem transition to scaling solutions and rollups. The two have proposed a new token standard, xERC-721, with a “code minimized” upgrade to the current standard. 

More Cryptocurrencies News

Bitcoin Weekly Forecast: BTC likely to correct to $50,000 soon

Bitcoin Weekly Forecast: BTC likely to correct to $50,000 soon

Bitcoin price has formed a potential top signal that forecasts a sell-off. The weekly chart also points to a bearish divergence, which adds credence to the bearish outlook. Investors can expect BTC to consolidate between the $52,062 to $45,160 levels.

More Bitcoin News

XRP price plunges as Kraken cites SEC v. Ripple lawsuit in its legal battle against the regulator

XRP price plunges as Kraken cites SEC v. Ripple lawsuit in its legal battle against the regulator

XRP price inches closer to support at $0.52 after the recent developments related to the SEC’s lawsuit against Ripple. Kraken cited a key part of the SEC’s lawsuit against Ripple that could impact the outcome of its own legal battle against the regulator. 

More Ripple News

Bitcoin: BTC likely to correct to $50,000 soon

Bitcoin: BTC likely to correct to $50,000 soon

Bitcoin price has formed a potential top signal that forecasts a sell-off. The weekly chart also points to a bearish divergence, which adds credence to the bearish outlook. Investors can expect BTC to consolidate between the $52,062 to $45,160 levels.

Read full analysis

BTC

ETH

XRP