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On October 18, the European Data Protection Board and the European Data Protection Supervisor jointly issued a statement regarding the regulation of a digital euro, a proposal put forth by the European Commission in July 2023. The regulators have put forth several recommendations aimed at strengthening personal data protection standards for the European Union’s central bank digital currency (CBDC).
Among their suggestions is the need for a clearer verification procedure for determining the maximum amount of digital euro that can be held within an individual account. The current draft allows the European Central Bank (ECB) and national central banks to establish a single access point for each user’s data. The regulators recommend conducting an assessment to evaluate the necessity and proportionality of such a singular access point. They emphasize that decentralized storage of these identifiers using technical measures is a feasible alternative.
Another concern raised by the regulators pertains to the lack of foreseeability in the proposed fraud detection and prevention mechanism of the CBDC. They propose considering “less intrusive measures” from a data protection perspective.
Additionally, the authorities “strongly recommend” the establishment of a “privacy threshold” for online transactions. This threshold would delineate a limit below which both offline and online low-value transactions would not be subject to tracking for Anti-Money Laundering and counterterrorism financing purposes. While the authorities did not specify a specific monetary amount, they referred to it as a transaction limit, encompassing “low-value daily transactions.”
Recently, the governing council of the ECB announced the commencement of the “preparation phase” for the digital euro project following a two-year investigation. The preparation phase is expected to last two years and will focus on finalizing the rules for the digital currency and selecting potential issuers.
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