European data watchdog urges enhanced privacy protections in EU Digital Euro legislation

The European Union’s data protection watchdog, the European Data Protection Board (EDPB), has voiced its concerns over the proposed EU legislation aimed at establishing a digital euro. EDPB called for reinforced privacy safeguards in the draft law to address mounting consumer worries regarding anonymity and data protection.

The European Central Bank (ECB) is gearing up for the digital euro, joining a global wave of central banks adapting to the evolving payment landscape. While the European Commission has put forth legislation that would grant legal backing to the digital euro, citizens are anxious about the potential displacement of cash and concerns over government surveillance of spending habits.

Approval of the draft legislation has encountered delays in addressing these apprehensions, particularly regarding the anonymity of low-value transactions involving the digital euro.

In a statement issued on Wednesday, the EDPB↗︎ “strongly recommended” the inclusion of a privacy threshold for online transactions using the digital euro. This threshold would ensure that both offline and online low-value transactions are not tracked for anti-money laundering and counter-terrorism financing purposes.

Furthermore, the EDPB called for greater clarification of the data protection responsibilities of both the ECB and payment services providers (PSP). This clarification should encompass the legal bases on which the ECB and PSPs should rely and the types of personal data they may process during the issuance, distribution, and use of the digital euro.

Highlighting the importance of privacy in the digital currency sphere, Irene Loizidou Nicolaidou, the EDPB’s deputy chair, stated, “A high standard of privacy and data protection is instrumental in citizens’ trust in this new digital currency.”

The European Data Protection Board’s recommendations come amid growing concerns about the balance between innovation in the digital payment sector and safeguarding individual privacy. As the European Central Bank moves ahead with its plans for a digital euro, the call for stronger privacy protections resonates with a public increasingly focused on their data security and financial privacy.

The ECB is expected to announce further preparations for the digital euro in the coming weeks, with the hope of finding a delicate equilibrium between embracing technological advances and protecting the privacy and trust of its citizens.