RBI lists risks of stablecoin for developing economies, calls for global regulation

Cointelegraph
Cointelegraph

28 Jun 2023 10:00 PM

The Reserve Bank of India has examined stablecoin in its latest Financial Stability Report and again emphasized the need for global regulation....

  • The Reserve Bank of India (RBI) has expressed concerns about stablecoins and their potential harm to emerging markets and developing economies.
  • The RBI listed six specific threats posed by stablecoins, including currency substitution, currency mismatches, difficulties in setting interest rates, circumvention of capital flow management measures, interference with banks' ability to mobilize money and create credit, and increased potential for wrongdoing in peer-to-peer transactions.
  • The RBI has called for global coordination to address these issues.
  • The RBI has shown more support for central bank digital currency (CBDC) and has initiated pilot projects for a digital rupee.

The article highlights the concerns raised by the Reserve Bank of India regarding stablecoins and their potential negative impact on emerging markets and developing economies. The sentiment expressed is negative, as the RBI identifies several threats and problems associated with stablecoins.

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You May Ask

What are the specific threats that stablecoins pose to emerging markets and developing economies, according to the RBI?How could stablecoin adoption lead to currency mismatches on the balance sheets of banks, firms, and households?Why could the presence of stablecoin in the economy make it difficult for an EMDE central bank to set domestic interest rates and liquidity conditions?How do stablecoins potentially undermine credit risk assessment and interfere with banks' ability to mobilize money and create credit?What is the RBI's stance on central bank digital currency (CBDC) and what initiatives has it undertaken in this regard?

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