By Pradeep Bhandari
Stablecoins are emerging as a new class of digital assets designed for stability. Put simply, they are digital tokens backed by a sovereign currency such as the rupee, and settled 24x7 in real time over public blockchains. This blend of sovereign trust and technological efficiency is beginning to reshape global finance. The US has legislated a stablecoin framework, while the UAE and Bahrain are moving ahead with their own digital currency rails, and China is reportedly considering its version. The world is exploring these possibilities, and India too can reflect on the opportunity.
With its scale, talent, and financial depth, India has the capacity to lead in this space. A natural next step could be to consider a regulated, rupee-backed digital asset, what one might call a Digital Rupee. Such an instrument would not be speculative or experimental, but a stable, digital extension of the rupee itself, backed one-to-one by Government of India bonds. At its core, it would be a utility for payments - nothing more, nothing less.
Under the vision and leadership of the Prime Minister, India has risen to become the world’s fifth-largest economy, with the rupee carrying greater weight in global markets than ever before. As the PM calls for Next Generation Reforms to position India as a leader for the century ahead, a regulated Digital Rupee could serve as a practical reform in that direction. It offers a potential pathway to take the rupee global, making it a trusted medium for trade, remittances, and digital finance.
Taking the Rupee Global
Over the past decade, under the vision of PM Modi, India has invested significantly in strengthening the rupee’s global role. From trade settlements with partner nations to growing confidence in India’s financial institutions, the groundwork has been laid. A Digital Rupee could build on this foundation by enabling faster, cheaper, and more secure cross-border transactions - positioning the rupee as a trusted medium of exchange in trade, remittances, and fintech.
Easing Remittances for Indian Families
India receives more remittances than any other country in the world, over ₹11 lakh crore annually. Yet, many still face delays and significant transaction costs. A blockchain based Digital Rupee could help ease this process, enabling near real-time transfers at lower cost and on transparent networks that are live 24x7. For millions of households, such an innovation could directly improve everyday financial flows.
Strengthening Sovereign Finances
Because each Digital Rupee would be backed by Government of India bonds, issuance could create steady demand for sovereign debt. Over time, this demand may support yields and lower borrowing costs- potentially unlocking savings worth thousands of crores annually. For a country investing heavily towards the vision of Viksit Bharat 2047, such savings could be meaningful.
Expanding Policy Flexibility
Deeper demand for government bonds could also provide the Reserve Bank of India with more policy flexibility. Lower yields may allow interest rates to be cut when needed, without the same risk of stoking inflation. This strengthens economic stability and supports growth in a time of global uncertainty.
A Pragmatic Path Forward
A piloted phased approach could be the most prudent way forward. India may consider beginning with specific corridors such as West Asia, where trade and diaspora ties are strong. Initial use cases can be focused on international trade and NRI remittances before expanding further. Compliance, transparency, and supervision would be a must ensure that such an initiative remains safe and stable.
This concept would not compete with the e-rupee that the RBI is piloting. Both could coexist. The e-rupee represents money issued directly by the central bank, while a Digital Rupee would be issued while being fully backed by government bonds. Together, they could expand the rupee’s reach and relevance across multiple contexts.
An Indian Model for the World
The larger vision is that India has the opportunity to contribute to the global standards of digital money and demonstrate a model anchored in stability, transparency, and prudence. While other countries may experiment with different approaches, India’s path could be one that is rooted in national interest, aligned with financial strength, and designed for inclusion.
The next step could be to test, refine, and build such a framework with measured pilots. By doing so, India would not only strengthen the rupee but also signal readiness to lead in shaping the future rules of digital finance globally.
Stablecoins are steadily moving from theory to practice in advanced economies. For us, with our capacity and vision, India is well placed to explore this opportunity. A carefully designed pilot Digital Rupee could be a step towards unlocking the stable way forward for the nation.
(Pradeep Bhandari is BJP National Spokesperson) | Views are personal and do not represent the stand of this publication
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