India calls on international community to focus on CBDCs

The Reserve Bank of India (RBI) has urged countries worldwide to focus on central bank digital currencies (CBDCs) instead of privately issued stablecoins, citing concerns about financial stability.

The call from the central bank of the world’s top digital asset jurisdiction, by adoption rate, comes as international battle lines are being drawn in the debate over stablecoins or CBDCs, with China recently doubling down on its digital yuan, while the United States backs stablecoins and bans CBDC.

For its part, the RBI laid out its stall firmly in the CBDC camp in its end-of-year financial stability report, published December 31, arguing that only CBDCs can preserve the “singleness of money” and the integrity of the financial system.

“Central bank digital currencies (CBDCs) can achieve the benefits that stablecoins claim to offer, i.e., efficiency, programmability, and instant settlement, but with the credibility and safety of central bank money,” said the RBI.

For this reason, the bank said it “strongly advocates that countries should prioritize central bank digital currencies (CBDCs) over privately issued stablecoins to maintain trust in money, preserve financial stability and design next generation payments infrastructure that is faster, cheaper and secure.”

At the same time as throwing its weight behind CBDCs, the RBI also pointed to the “rapid growth of stablecoins” as a source of concern, saying that “while they are currently mostly used in the crypto asset network, their wider application could pose significant risks, including risk to the ‘singleness of money’, threat to monetary sovereignty, run and liquidity vulnerabilities, and potential credit disintermediation.”

This has become an increasingly popular refrain among many central banks and banking organizations worldwide, including the Bank for International Settlements (BIS)—an international financial institution of central banks that fosters international monetary and financial cooperation while serving as a bank for central banks.

In its Annual Economic Report 2025, the BIS issued a stark warning about stablecoins, highlighting their potential to undermine monetary sovereignty, transparency issues, and the risk of capital flight from emerging economies.

Such concerns have only been heightened by another bumper year for the stablecoin space. According to recent research by blockchain intelligence firm TRM Labs, the transaction volume of stablecoins reached record highs in 2025. By August 2025, stablecoins had reached their highest-ever annual transaction volume, rising 83% between July 2024 and July 2025, and exceeding $4 trillion in transaction volume between January 2025 and July 2025.

In its December report, the RBI argued that introducing stablecoins can create new channels for financial stability risks, particularly during periods of market stress, and that it is “vital that jurisdictions carefully assess the attendant risks and determine policy responses appropriate to its financial system.”

Despite the RBI’s stablecoin skepticism, the government of India hinted in its recent Economic Survey 2025-2026 that it may provide backing for the space through regulation.

This seeming disconnect between the central bank and the country’s lawmakers over whether to back stablecoins or CBDC is representative of an ongoing global debate, in which battle lines are being drawn, with the world’s two superpowers on either side.

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China or US approach?

When it comes to supporting CBDCs or stablecoins, it increasingly appears that for many, it is an either-or situation. The technologies are not—in principle—mutually exclusive, but they do compete in the same space, i.e., as a digital, stable, blockchain-based alternative to the national currency and payment method of choice.

On the one hand, you have the central bank-issued, backed, and controlled CBDC, the most direct translation of a fiat currency into a digital form. On the other hand, you have privately issued stablecoins; free of the negative associations that come with a state-monitored digital currency, but without the steady, guiding hand of a central bank and reliant on the fortunes and management of an opaque—sometimes even decentralized—private company.

This already tense rivalry for the future of mass payment systems has been given further significance by the world’s two leading economies, the U.S. and China, which appear to be taking on the roles of opposing champions for the two sides of the debate.

In mainland China, cryptocurrency transactions and exchanges were effectively banned by regulation in September 2017. This prohibition, which includes stablecoins, remains in place to this day.

However, in 2019, the government began an official pilot for a digital yuan CBDC, also known as the e-CHY. Since then, the digital yuan has become one of the most advanced and widely used CBDCs in the world. As of November, the government had processed more than 3.4 billion transactions worth nearly 16.7 trillion yuan ($2.38 trillion).

In contrast, the U.S. is staunchly anti-CBDC, with the prevailing view amongst lawmakers being that it could be misused as a tool of state surveillance and oppression. U.S. critics of CBDCs often point to China’s digital yuan as a cautionary tale “we must avoid a CBDC, lest we become a totalitarian surveillance state like communist China”. To this end, one of President Trump’s first acts upon taking office for a second time, in January 2025, was to sign an executive order banning CBDCs in the U.S.

In keeping with its free-market-above-all principles, the U.S. has instead thrown its weight behind private-sector U.S. dollar-issued stablecoins. In June, Trump signed into law the long-awaited ‘GENIUS Act’ to provide regulatory certainty and support for the domestic U.S. stablecoin sector.

In terms of where other countries fall in this debate, the Atlantic Council’s CBDC tracker currently identifies 81 jurisdictions exploring or developing a retail CBDC, with 38 pilots already launched. Among these are major economies, including those in Europe, the United Kingdom, Russia, Brazil, Japan, India, and the U.S.’s two bordering neighbors, Mexico and Canada.

This suggests that Trump and co. may be losing the argument when it comes to CBDCs. Yet, the booming stablecoin space appears unaffected by these developments, which in turn suggests that maybe the two monetary technologies could coexist after all.

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Watch: Finding ways to use CBDC outside of digital currencies

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