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India’s Chief Economic Adviser Nageswaran warns USD stablecoins challenge monetary control He flagged risks to seigniorage and financial sovereignty, especially in emerging markets Global USD stablecoin market exceeds $300 billion; India cites UPI as domestic buffer The rising dominance of the U.S. dollar–backed stablecoins could disrupt global monetary frameworks. This warning has come out from India’s Chief Economic Adviser, V. Anantha Nageswaran. Speaking in Mumbai, he warned the increasing adoption challenges traditional monetary systems, especially in emerging economies seeking to safeguard financial sovereignty.  Why It matters now The stablecoin market has crossed $300 billion in value, with steady growth through 2025. That scale draws banks, funds, and payments firms toward rails that settle in dollar tokens rather than local currency, raising policy stakes for emerging economies like India. Related: Banks Confront $1 Trillion Deposit Shift Toward USD-Linked Stablecoins USD Stablecoins Challenge Policy and Seigniorage According to Reuters report, Nageswaran noted that the rising circulation of dollar-pegged tokens could affect monetary transmission and the seigniorage benefits that governments rely on.  Seigniorage – the profit governments make from issuing currency, is threatened as stablecoins redirect transaction demand toward private digital assets instead of state-issued money. Countries relying on national currencies for fiscal stability face reduced control over liquidity and interest rate adjustments in such cases. He also highlighted intensifying competition between stablecoins and traditional banking channels. As users transact via digital tokens, banks struggle to retain deposits and lending influence. This trend also alters how central banks implement policy, complicating inflation targeting and foreign exchange management. How Does India’s UPI Offer a Buffer? India’s own digital payment framework, however, provides a buffer against these global trends. India’s UPI, the Unified Payments Interface, has already revolutionized domestic transactions with an estimated 491 million individuals and 65 million merchants of active users as of…

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Filed under: News - @ October 30, 2025 10:28 am