Context: At the IMF–World Bank Annual Meeting (October 2025), RBI Governor Sanjay Malhotra emphasized the need for central banks to promote Central Bank Digital Currencies (CBDCs) over stablecoins for cross-border transactions.
What are CBDCs and Stablecoins?
A CBDC is a sovereign, digital form of fiat money issued and regulated by a central bank. It represents legal tender in electronic format.
In contrast, stablecoins are private cryptocurrencies pegged to fiat assets (like the US dollar) to maintain price stability but lack sovereign backing.
Significance of Promoting CBDCs Over Stablecoins
- Monetary Sovereignty:
CBDCs preserve domestic monetary control. The RBI’s 2024 report warns that US-dollar stablecoins could trigger “rupee dollarisation” if left unchecked. - Cross-Border Efficiency:
According to BIS (2025), CBDC-based cross-border payments could cut remittance costs by nearly 50% compared to traditional SWIFT networks. - Regulatory Transparency:
CBDCs ensure KYC/AML compliance, backed by sovereign guarantees — unlike the $285 billion stablecoin market, which often operates in unregulated zones. - Technological Edge:
Tokenised CBDCs combine blockchain programmability with state-backed trust, offering instant, programmable, and traceable transactions.
Challenges in Replacing Stablecoins
- Limited Global Adoption: Only 19 central banks have pilot-stage CBDCs (IMF Tracker 2025), lacking standardised interoperability.
- Cybersecurity Risks: Over 60% of central banks cite cyberattacks and surveillance concerns as top risks (BIS 2025).
- Dominant Stablecoin Market: Private coins like Tether (USDT) and USDC control 90% of global stablecoin circulation (IMF, 2025).
Way Forward for India
Global CBDC Corridors: India should join the BIS mBridge project (UAE–China–Thailand–Hong Kong) to enable real-time, low-cost, and secure CBDC settlements.
Tech–Policy Convergence: Adoption of the IMF’s XC platform will support interoperability across jurisdictions.
Cyber Resilience: Implement the FSB 2025 Cyber Resilience Framework and deploy AI-driven security tools to detect fraud.
Awareness & Trust: Expand the RBI Digital Rupee Mission, focusing on public literacy — only 26% of Indians currently understand CBDCs (FIS Survey 2024).
Conclusion
CBDCs represent the next frontier of monetary innovation — combining digital efficiency with sovereign trust. For India, leading in CBDC adoption aligns with its Digital Public Infrastructure (DPI) vision and enhances global financial stability.