European Data Protection Board and Supervisor Recommend Enhancements for Digital Euro
The European Data Protection Board (EDPB) and the European Data Protection Supervisor (EDPS) have jointly issued a statement regarding the regulation of the “digital euro” proposed by the European Commission. The regulators have made recommendations to improve the personal data protection standards for the European central bank digital currency (CBDC).
Clarifying the Verification Procedure
The EDPB and EDPS suggest clarifying the proposed verification procedure for the maximum amount of digital euro held by individual accounts. They recommend assessing the necessity and proportionality of a singular access point to each user’s data, emphasizing the feasibility of decentralized storage measures.
Fraud Detection and Prevention Mechanism
The regulators highlight the lack of foreseeability in the proposed fraud detection and prevention mechanism (FDPM) of the CBDC. They recommend further demonstrating its necessity or considering alternative, less intrusive measures from a data protection perspective.
Establishing a Privacy Threshold
The EDPB and EDPS strongly recommend setting a privacy threshold for online transactions, exempting low-value offline and online transactions from tracking for anti-money laundering and combating financing of terrorism (AML/CFT). However, they do not specify a specific amount, referring only to low-value daily transactions.
Preparation Phase for Digital Euro Project
The governing council of the European Central Bank (ECB) has announced a two-year preparation phase for the digital euro project. This phase will focus on finalizing rules for the digital currency and selecting potential issuers.
Hot Take: Enhancing Data Protection Standards for Digital Euro
The joint opinion statement from the EDPB and EDPS highlights important recommendations to strengthen data protection standards for the digital euro. By clarifying verification procedures, addressing the FDPM’s foreseeability, and establishing a privacy threshold for transactions, the regulators aim to ensure the highest level of privacy and security for users of the CBDC. As the ECB enters the preparation phase for the digital euro project, these enhancements will play a crucial role in shaping the future of digital currencies in Europe.
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