EU regulators propose stronger privacy protections for the digital euro

EDPB и EDPS published joint recommendations for the digital euro, ensuring the “highest standards of data protection and privacy”.

In June, the European Commission proposed a legislative proposal that would establish a legal basis for a possible issuance CBDC. According to the document, the new form of money would operate as a digital wallet. Users would be able to conduct offline transactions.

EDPB and EDPS backed the bill, noting a high level of data protection, but added several improvements.

The regulators proposed ensuring processing of only necessary personal data and avoiding its “excessive centralisation” by the ECB or national central banks.

The provisions on the digital euro impose limits on ownership of a certain amount of the asset. Compliance checks will be carried out by processing users’ identifiers and its limits, the authorities explained.

As part of meeting the ECB’s requirements, the ECB could create a single data access point for each holder. The two bodies recommend conducting an assessment to determine the “necessity and proportionality” of such a method. They stressed that the decentralised storage of identifiers is theoretically feasible.

The regulators also urged the creation of a “privacy threshold” for online and offline transactions, below which they would not be tracked.

Earlier, ECB President Christine Lagarde stated that the final decision on launching the digital euro would be taken in the autumn.

As noted, the European regulator began studying CBDC in 2021, though the initiative originated in November 2019.

Subsequently, the ECB published a comprehensive report on the topic. In 2021, Lagarde forecasted the appearance of the digital euro within four years.