The Central Bank of India Says Stablecoins Threaten Financial Stability

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The Reserve Bank of India (RBI) cautioned in December of a potential global crisis due to the emergence of digital currencies as these instruments lack collateral and are often used for speculative and illegal activities.

On June 28, the Central Bank published a report warning of the risks posed by stablecoins, as their use could decrease the attractiveness of physical cash and cause financial instability.

Further, it highlighted the fact such tokens can be used by criminal factions because the movement of funds in digital format cannot be tracked by supervisors.

According to the RBI, the best way to counter this is through the introduction of Central Bank Digital Currencies (CBDCs) as their issuers will be financial authorities who will have the necessary tools to keep track of the transactions.