The European Data Protection Board and the European Data Protection Supervisor jointly released a statement on Oct 18. The statement addressed the proposed regulation of a digital euro by the European Commission in July 2023. It provided several recommendations to enhance personal data protection standards for the Central Bank Digital Currency (CBDC) of the European Union.
The authorities propose the need for clearer guidelines regarding the verification process to determine the maximum allowable digital euro holdings in individual accounts. The current draft allows the European Central Bank (ECB) and national central banks to establish a unified access point for user and data retrieval.
Both regulatory bodies emphasize the importance of conducting an assessment to evaluate whether implementing a single access point is necessary and proportionate. They highlight the feasibility of utilizing technical measures to decentralized storage of these identifiers.
ECB Initiates Two-Year Preparation Phase For Digital Euro Project
The regulatory authorities also emphasize that the CBDC’s proposed fraud detection and prevention mechanism lacks predictability. They suggests exploring alternative approaches with a stronger focus on data protection, aiming for “less invasive measures.”
The regulatory bodies strongly advocate implementing a privacy threshold for online transactions. This threshold would exempt offline and online low-value transactions from tracking to prevent Anti-Money Laundering and counter-terrorism financing. However, no specific amount has been specified; instead, they refer to the transaction limit, which includes daily low-value transactions.
Earlier this week, the European Central Bank’s governing council introduced the “preparation phase” for the digital euro project. This crucial milestone follows a comprehensive two-year investigation. Over the next two years, emphasis will be placed on finalizing regulatory guidelines for digital currency and identifying potential issuers.
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