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

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RBI lists risks of stablecoin for developing economies, calls for global regulation
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The Reserve Bank of India has assessed stablecoin, and it didn’t like what it found.

Stablecoin has a lot of potential to harm emerging markets and developing economies, the Reserve Bank of India claimed in its latest Financial Stability Report,has been a steadfast critic

of cryptocurrency, but it was particularly articulate about the problems it sees with stablecoin “from an EMDE [emerging markets and developing economies] perspective.” It listed six specific problems, even though: “The lack of authenticated data and inherent data gaps in the crypto ecosystem impede a proper assessment of financial stability risks.”

A stablecoin could threaten an EMDE through currency substitution, as its underlying assets are generally denominated freely convertible foreign currency, the report claimed. The “cryptoisation” of the economy that could result from large-scale stablecoin adoption could lead to currency mismatches “on the balance sheets of banks, firms, and households.”

News Alert | RBI Financial Stability Report: Governor Shaktikanta Das on importance of tech, opportunities for growth and global cooperation among regulators

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