The European Union’s data protection watchdog has urged the implementation of stronger privacy safeguards in the EU’s draft legislation designed to support the introduction of a digital euro, reported Reuters.
The call comes as the European Central Bank (ECB) is poised to confirm its commitment to advancing preparations for the digital euro, aligning with global trends among central banks looking to stay at the forefront of payment technology.
The European Commission has put forth a proposal for a draft law that would provide the necessary legal foundation for the digital euro, a move that has sparked concerns among consumers. Many fear that the digital euro may displace physical cash and potentially enable authorities to monitor individual spending habits. Consequently, the approval of the draft law has been delayed to allow for more time to address these apprehensions, particularly regarding the potential loss of anonymity in low-value transactions when using the digital euro.
The European Data Protection Board (EDPB) issued a statement on Wednesday, strongly recommending that the draft legislation incorporate a privacy threshold specifically for online transactions involving the digital euro. This threshold would ensure that neither offline nor online low-value transactions are traceable for anti-money laundering and counter-terrorism financing purposes. Furthermore, the EDPB emphasized the need for clearer definitions of data protection responsibilities held by both the ECB and payments services providers (PSP).
The EDPB said these definitions should encompass the legal grounds on which the ECB and PSP should rely, as well as the categories of personal data they can process for activities related to the issuance, distribution, and utilization of the digital euro.
The board expressed its satisfaction with the provision that digital euro users will always have the option to choose between digital euros and traditional cash for their transactions, offering a dual-pronged approach to address the concerns surrounding the potential impact of the digital euro on personal privacy and financial anonymity.