Ensuring low-value digital euro transactions are not traced is one of the recommendations made by two data protection agencies in the EU. The independent bodies have presented their joint opinion on the proposed regulation for the upcoming digital version of Europe’s common fiat currency.
Independent EU Regulators Insist on Embedding Data Protection in the Design of the Digital Euro
The European Data Protection Board (EDPB) and the European Data Protection Supervisor (EDPS) have made several recommendations on how to ensure high-level protection for the personal data and privacy of users of the future digital euro.
The stated aim of the eurozone’s central bank digital currency (CBDC) is to provide Europeans with an alternative means to make online and offline payments, complementing cash. The authorities welcomed the idea that users will have a choice and that the proposal for an EU regulation on the establishment of the digital euro addresses many data protection aspects.
However, the agencies believe that data protection should be embedded in the digital euro’s design itself and suggest further improvements to guarantee that the rights to privacy and protection of personal data are effectively preserved. EDPB Deputy Chair Irene Loizidou Nicolaidou emphasized:
A high standard of privacy and data protection is instrumental in gaining citizens’ trust in this new digital currency.
Introducing a “privacy threshold” under which neither offline nor online low-value transactions with digital euro can be traced for anti-money laundering or counter-terrorism financing purposes is one of the steps the EDPB and the EDPS “strongly recommend.”
The two organizations are also objecting to the proposed establishment of a single access point to verify that individual digital euro holding limits are not exceeded. The plan is to conduct this verification by processing identifiers of the digital euro users and their holding limits.
The data protection bodies suggest “assessing whether the single access point is necessary and proportionate, underscoring that technical measures allowing for a decentralized storage of these identifiers are feasible, as an alternative.”
After two years of investigation, the European Central Bank (ECB) announced on Wednesday its decision to move to the next “preparation phase” of the digital euro project. The monetary authority assured in a statement that data protection will be a priority and that the Eurosystem would not be able to link payment information to individual users.
Do you believe the design of the digital euro will ensure sufficient personal data protection to gain European citizens’ trust? Tell us in the comments section below.
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