The Reserve Bank of India (RBI) has warned that widespread adoption of stablecoins could threaten India's monetary sovereignty and financial stability due to inherent vulnerabilities. In its Financial Stability Report, the RBI stated that stablecoins, particularly foreign currency-denominated ones, could erode monetary control and weaken policy transmission. The central bank advocates prioritizing Central Bank Digital Currencies (CBDCs) as a safer alternative, offering similar benefits with central bank credibility and integrity.