India is preparing a fully collateralized digital asset that could go live in early 2026 with the goal of protecting domestic liquidity.
India’s new digital asset model is designed to operate at a one to one ratio with the local currency and will be minted only when backed by secure instruments such as cash, deposits or government securities. This structure aims to reduce risks associated with foreign stablecoins while creating a transparent and reliable digital financial framework.
A key objective is preventing capital outflow toward dollar based stablecoins. With rising concerns about domestic savings shifting abroad, the new asset is intended to keep liquidity within the country and support demand for local government debt instruments. This approach seeks to promote innovation without compromising financial stability.
The asset is positioned as a complementary layer to the country’s central bank digital currency. In this dual layer setup, the central bank’s digital currency acts as the settlement foundation while the private sector operated interaction layer enables payment innovation, programmable transactions and cross border transfers. Restrictions such as limiting issuance to business accounts and allowing trading only among approved addresses strengthen regulatory oversight.
India’s move comes as developing nations express concern about rising usage of dollar backed stablecoins and the potential drain on bank deposits. Recent analyses suggest that emerging market banks could face significant capital flight over the next three years, and India’s digital asset initiative aims to safeguard the nation’s financial stability in response to this trend.
