India is channeling portions of its roughly $80 billion annual welfare system through the e-rupee across 10 pilot programs in an effort to curb subsidy leakage and give its central bank digital currency a functional use case ahead of the 2026 BRICS summit. The pilots, concentrated in Maharashtra ...
"Stablecoins could coexist with CBDCs and deposit tokens in a supplementary and competitive manner." — Shin Hyun-song, Governor, Bank of Korea
India is channeling portions of its roughly $80 billion annual welfare system through the e-rupee across 10 pilot programs in an effort to curb subsidy leakage and give its central bank digital currency a functional use case ahead of the 2026 BRICS summit. The pilots, concentrated in Maharashtra and Gujarat, use programmable restrictions to ensure subsidies reach intended recipients and are spent only at approved vendors.
The initiative unfolds alongside parallel CBDC acceleration across Asia. South Korea's newly inaugurated Bank of Korea Governor Shin Hyun-song signaled on April 21 that CBDCs and bank-issued deposit tokens — not stablecoins — will anchor the country's digital asset framework. China's digital yuan has processed over 3.4 billion transactions worth 16.7 trillion yuan ($2.38 trillion) and became the first CBDC worldwide to offer interest on wallet balances as of January 1, 2026. Together, these three economies — representing over 3.2 billion people — are building state-controlled digital currency infrastructure that bypasses the private stablecoin model favored by U.S. policy.
The Reserve Bank of India is simultaneously pushing a proposal to link BRICS nations' CBDCs at the bloc's 2026 summit, an initiative that directly challenges dollar-denominated settlement rails. The Trump administration has responded with threats of 100% tariffs on BRICS members pursuing dollar alternatives, while signing an executive order promoting dollar-backed stablecoins and banning U.S. CBDC development. The result is a widening structural divide: state-issued CBDCs in Asia versus private stablecoins backed by U.S. regulatory preference.
India's welfare architecture — covering food subsidies, agricultural support, cooking fuel, and rural employment programs — distributes roughly $80 billion annually. The system has historically suffered from ghost beneficiaries, duplicate registrations, diverted payments, and delayed reimbursements. According to World Bank estimates, India could save up to $10 billion annually by eliminating these inefficiencies.
The e-rupee pilots, reported by CoinDesk on April 24, target this leakage directly through programmability. In Maharashtra's Phulenagar village, farmers receive digital rupee subsidies covering up to 80% of drip-irrigation equipment costs. The tokens are restricted: they can only be spent at approved vendors and cannot be converted to cash or diverted to other household expenses. There is no reimbursement lag — the farmer does not pay upfront and wait for a government refund.
A separate pilot in Gujarat enrolls beneficiaries of the state's subsidized food distribution system. Approximately 15,000 beneficiaries are currently active, with the program targeting all 7.5 million eligible households by June 2026. The programmable tokens ensure that food subsidies are spent exclusively at government ration shops.
The approach differs from India's existing Aadhaar-linked Direct Benefit Transfer (DBT) system, which reduced welfare leakage by approximately 12.7% according to a BCG report. The e-rupee adds a layer that DBT lacks: expenditure-level control. Where DBT verifies the identity of the recipient, programmable CBDCs control what the money can buy and where.
The e-rupee, launched in December 2022, has reached approximately 10 million users, up from 7 million earlier in 2026, according to Reuters. Cumulative transaction volume since launch stands at $3.6 billion.
For context, India's Unified Payments Interface (UPI) processes approximately $300 billion monthly. The e-rupee's entire three-year transaction history equals roughly 1.2% of a single month of UPI volume.
The Reserve Bank of India achieved 1 million daily e-rupee transactions in December 2023, though reports indicate this metric was partially engineered through incentive programs rather than organic demand. The RBI's focus has since shifted from raw transaction counts to testing specific CBDC functionalities: offline payments via NFC technology, and programmable transfers for government disbursements.
The welfare pilots represent an attempt to solve the adoption problem through a captive user base. Subsidy recipients have no choice of payment mechanism — they receive funds in the format the government designates. This approach substitutes organic market demand with administrative mandate.
On April 21, Bank of Korea Governor Shin Hyun-song used his inaugural address to lay out a bank-led digital currency model. His framework: the central bank issues a CBDC, while commercial banks provide deposit tokens fully convertible into it. Stablecoins were absent from the speech.
The omission is notable. During his confirmation hearing, Shin had described stablecoins as potentially "supplementary and competitive" alongside CBDCs and deposit tokens. His first official address dropped that framing entirely, signaling that South Korea's forthcoming Digital Asset Basic Act will likely marginalize private stablecoin issuance.
South Korea's CBDC development runs through two programs. Project Hangang is a domestic retail CBDC and deposit-token pilot. Project Agorá is a cross-border tokenization initiative led by the Bank for International Settlements. Shin indicated the BOK will increase scrutiny of crypto markets and non-bank finance while pursuing 24-hour foreign exchange trading capability and an offshore won settlement system.
The policy direction places South Korea alongside India and China in a model where the state retains issuance authority over digital money. This contrasts with the U.S. approach, where private companies (Circle, Tether, and potentially regulated banks) issue dollar-denominated tokens.
China's e-CNY entered a new operational phase on January 1, 2026, when the People's Bank of China began allowing commercial banks to pay interest on digital yuan wallet balances. This makes the e-CNY the first CBDC globally to function as interest-bearing digital deposit currency rather than a cash equivalent.
The numbers are substantial. As of November 2025, China had processed over 3.4 billion e-CNY transactions worth 16.7 trillion yuan ($2.38 trillion). The platform's participants include state-owned commercial banks, and verified wallet balances now receive deposit insurance protection equivalent to traditional bank deposits.
The PBOC has expanded cross-border e-CNY use through pilots with Singapore, Thailand, Hong Kong, the UAE, and Saudi Arabia. In September 2025, the PBOC launched an e-CNY International Operation Center in Shanghai.
Despite these volumes, organic adoption remains a challenge. The interest-bearing model is designed to address this by integrating e-CNY with payroll, loans, and investment products — making the CBDC a standard component of commercial banking rather than a standalone payment tool.
The RBI has proposed including CBDC linkage across BRICS economies on the 2026 summit agenda. India hosts the summit. The proposal envisions interconnecting existing national CBDCs — India's e-rupee, China's e-CNY, Brazil's Drex — rather than creating a single supranational currency.
The technical model draws on Project mBridge, a multi-central bank digital currency platform originally developed with BIS support. Participating central banks include China, Hong Kong, Thailand, the UAE, and Saudi Arabia. By November 2025, mBridge had processed 4,047 transactions worth $55.49 billion — a 2,500-fold increase from the $22 million processed across 160 transactions during the initial 2022 pilot.
China's e-CNY accounts for an estimated 95% of mBridge's settlement volume. The BIS transferred governance of the project to participating central banks in October 2024.
Under the BRICS proposal, domestic CBDC ledgers would remain sovereign while a neutral bridge layer enables payment-versus-payment foreign exchange settlement. Each nation maintains monetary sovereignty; the bridge handles only the settlement mechanics.
The economic significance is straightforward. If BRICS nations — which now include Brazil, Russia, India, China, South Africa, Egypt, Ethiopia, Iran, Saudi Arabia, and the UAE — settle bilateral trade in CBDCs rather than dollars, demand for dollar-denominated correspondent banking and SWIFT messaging declines proportionally. BRICS members accounted for approximately 37% of global GDP in 2025.
The Trump administration's response operates on two tracks. First, an executive order banning the development of a U.S. CBDC and promoting "the development and growth of lawful and legitimate dollar-backed stablecoins worldwide." Second, tariff threats: Trump has threatened 100% tariffs on BRICS members pursuing dollar alternatives. Kremlin spokesman Dmitry Peskov responded that "BRICS is not talking about creating a common currency, nor has it ever done so" — a statement technically accurate but sidestepping the CBDC bridge model.
The U.S. bet is that dollar-denominated stablecoins, issued by private companies under U.S. regulatory oversight, can project dollar dominance into digital finance without requiring a government-issued CBDC. The GENIUS Act, currently moving through Congress, would establish the regulatory framework for this approach.
The logic: every USDC or USDT in circulation represents demand for U.S. Treasury securities (which back the tokens), extending the dollar's reserve status through private-sector infrastructure rather than central bank issuance.
The divergence creates two distinct value distribution models for digital money.
CBDC model (Asia): Value flows through state-controlled infrastructure. Central banks retain seigniorage. Commercial banks serve as distribution intermediaries. Programmability enables direct fiscal policy execution. Cross-border settlement occurs between central banks without private intermediaries. Transaction data accrues to the state.
Stablecoin model (U.S.): Value flows through private issuers. Seigniorage equivalent (interest on reserves) accrues to stablecoin companies. Distribution occurs through crypto exchanges, wallets, and DeFi protocols. Cross-border settlement occurs through token transfers on public blockchains. Transaction data distribution varies by chain and protocol.
Neither model is inherently superior. The CBDC model offers greater fiscal control and subsidy efficiency but concentrates surveillance capabilities. The stablecoin model distributes economic rents more broadly but relies on private companies maintaining adequate reserves and regulatory compliance.
The welfare pilot data will provide the first empirical test of whether CBDC programmability delivers measurable reduction in subsidy leakage compared to Aadhaar-linked DBT alone. India's existing 12.7% leakage reduction through DBT sets the baseline. If programmable e-rupee pilots demonstrate materially better outcomes, the case for CBDC-based fiscal infrastructure strengthens. If they do not, the programmability argument loses its strongest real-world justification.
Three of Asia's largest economies are building state-controlled digital currency infrastructure at different stages of maturity. China leads on transaction volume. India leads on programmable fiscal applications. South Korea is formalizing the regulatory preference for central bank issuance over private alternatives.
The BRICS CBDC bridge proposal, if implemented, would create the first multi-sovereign settlement layer operating outside dollar-denominated rails at meaningful scale. Whether it reaches that scale depends on technical execution, geopolitical dynamics, and whether the mBridge model — currently 95% dominated by China's e-CNY — can accommodate genuinely multilateral governance.
For the broader digital asset ecosystem, the question is not whether CBDCs or stablecoins will prevail. Both will exist. The question is which model captures the marginal transaction in cross-border trade, remittances, and government-to-person payments — the segments where digital money's economic value is most directly measurable.