A joint opinion statement on the regulation of the “digital euro,” suggested by the European Commission in July 2023, was released on October 18 by the European Data Protection Board (EDPB) and the European Data Protection Supervisor (EDPS). The regulators provided a number of suggestions to improve the personal data protection requirements for the digital currency of the European Central Bank (CBDC).
The proposed verification process for the maximum permitted amount of digital euro held by individual accounts should be made clearer, according to the EDPB and EDPS. The present draught permits the creation of a single access point to each user’s data by the European Central Bank (ECB) and national central banks. To determine the necessity and proportionality of a single access point, the EDPB and the EDPS advise completing an assessment.
The regulators also draw attention to the CBDC‘s proposed fraud detection and prevention mechanism’s lack of predictability. From a data protection standpoint, the EDPB and the EDPS advise proving the FDPM’s necessity even more or, failing that, considering “less intrusive measures.” Additionally, the EDPB and the EDPS “strongly recommend” that a “privacy threshold” be set for online transactions, below which low-value offline and online transactions are not tracked for AML/CFT (anti-money laundering and countering the financing of terrorism). They did not specify a dollar number, simply the transaction limit, which applied to “low-value daily transactions.”
Following a two-year examination, the ECB’s governing council this week confirmed that the “preparation phase” for the digital euro project had begun. The preparation phase, which will span two years, will be devoted to identifying potential issuers and finalising the rules for the digital currency.