On Oct. 18, the European Data Protection Board and the European Data Protection Supervisor issued a joint statement on regulating a digital euro, as proposed by the European Commission in July 2023. The regulators made several recommendations to enhance the personal data protection standards for the European Union central bank digital currency (CBDC).
The authorities suggest clarifying the proposed verification procedure for the maximum allowed amount of digital euro held by an individual account. The current draft allows the European Central Bank (ECB) and national central banks to establish a single access point to each user’s data. Both authorities recommend conducting an assessment to determine the necessity and proportionality of a singular access point. They emphasize that employing technical measures for the decentralized storage of these identifiers is feasible.
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The regulators also point out the lack of foreseeability in the proposed fraud detection and prevention mechanism of the CBDC. They recommend considering “less intrusive measures” from a data protection perspective.
The authorities also “strongly recommend” establishing a “privacy threshold” for online transactions, below which offline and online low-value transactions are not subject to tracking for Anti-Money Laundering and combating the financing of terrorism. However, they didn’t come up with a specific amount, referring only to the transaction limit, covering “low-value daily transactions.”
This week, the governing council of the ECB announced the ”preparation phase” for the digital euro project following a two-year investigation. The preparation phase will last two years and focus on finalizing rules for the digital currency and selecting possible issuers.
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