European Regulators Recommend Enhancing Personal Data Protection for Digital Euro

According to Cointelegraph, on October 18, the European Data Protection Board (EDPB) and the European Data Protection Supervisor (EDPS) issued a joint opinion statement on the regulation of the 'digital euro,' proposed by the European Commission in July 2023. The regulators made several recommendations to enhance the personal data protection standards for the European central bank digital currency (CBDC).The EDPB and EDPS suggest clarifying the proposed verification procedure for the maximum allowed amount of digital euro held by individual accounts. The current draft allows the European Central Bank (ECB) and national central banks to establish a single access point to each user's data. The EDPB and the EDPS 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.The regulators also point out the lack of foreseeability in the proposed fraud detection and prevention mechanism of the CBDC. The EDPB and the EDPS recommend further demonstrating the FDPM's necessity or, otherwise, considering 'less intrusive measures' from a data protection perspective. The EDPB and the EDPS 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 (AML/CFT). 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, as well as selecting possible issuers.