Why Central Digital Currencies: Why Stablecoins Deserve Preference in the Eyes of the RBI

The debate over digital currencies is becoming increasingly intense: while private stablecoins are gaining importance, the Indian central bank strongly advocates for a different approach. In December, the Reserve Bank of India (RBI) published its latest Financial Stability Report, clearly emphasizing that countries should prefer central digital currencies, known as CBDCs, over privately issued stablecoins.

The RBI’s Concerns Regarding Financial Stability

Behind this stance lies a strategic consideration: the RBI sees CBDCs as a better instrument for maintaining financial stability and trust. According to the report, central digital currencies “preserve the uniformity of money and the integrity of the financial system.” They serve not only as a means of payment but also as an “ultimate settlement asset” – a fundamental element for public confidence in the currency itself.

The Indian central bank argues that CBDCs act as “anchors for trust in money,” providing the stability that private stablecoins may not be able to guarantee. This trust is not to be underestimated: it forms the foundation of every financial system.

Global Implementation of CBDCs Still in Early Stages

However, the practical reality shows that the rollout of CBDCs has been cautious so far. Only three countries worldwide have successfully implemented functioning digital central bank currencies – Nigeria, the Bahamas, and Jamaica. Many other jurisdictions are still considering this step or are in early pilot phases.

A Multi-layered Advantage for Central Digital Currencies

The RBI summarizes its position: countries should actively promote CBDCs to not only secure trust in money and preserve financial stability but also to build a next-generation payment infrastructure. This new infrastructure would have several advantages – it would be faster, more cost-effective, and more secure than existing systems.

The RBI’s demand can thus be interpreted as a clear signal: while stablecoins may play a role in the ecosystem, CBDCs should take precedence in terms of financial security and systemic stability.