The European Data Protection Board (EDPB) has issued a call for EU institutions to maintain privacy when designing a digital version of the euro. The agency is ready to provide advice on the data protection issues of the project. At the same time, an executive of the European Central Bank vowed that the digital euro will protect the privacy of users.
EDPB insists that data protection should be a priority for the Eurozone CBDC project
EDPB shared its views on the privacy and data protection aspects of a possible digital euro in a letter to EU institutions. The independent agency insists that ensuring privacy and data protection are critical to the success of the Common European Fiat Currency Digitalization Project. In the announcement published on its website, the board of directors emphasized:
Very high standards of privacy and data protection are essential to strengthen the trust of end users and should be seen as a unique element of providing a digital euro, representing a key success factor.
The agency added that its concerns should be considered during the design phase of the Eurozone Central Bank Digital Currency (CBDC). In this document, the EDPB also recommends a high-level data protection impact assessment. The agency expressed its willingness to provide advice to the European Central Bank and other EU institutions involved in the development of the digital euro.
The mission of the European Data Protection Commission is to promote the implementation of the General Data Protection Regulation (GDPR). It was established in 2018 to replace the Article 29 Working Group. EDPB issued guidelines and recommendations on the application of GDPR, which were implemented in May of the same year. It also advises the European Commission on related matters and resolves disputes between national authorities.
ECB official vows to use digital euro to promote privacy
In terms of CBDC, the Eurozone’s monetary policy regulators lag behind other major central banks, such as the central banks of China, Russia, and the United States. Earlier this month, the European Central Bank stated in a report that the digital euro may increase global attractiveness. currency. Officials said earlier this year that a decision on whether to proceed with the digital euro project is expected in mid-2021. Fabio Panetta, a member of the European Central Bank’s Executive Committee, recently told the Financial Times that the management committee will discuss the matter at a meeting in July.
Panetta believes that the European Central Bank’s participation in digital payments will better protect privacy, because the bank is not a private company. The official pointed out: “We have no commercial interest in storing, managing, or monetizing user data.” He added that the digital euro will also help the Eurozone respond to threats from other digital currencies. Although Panetta called Bitcoin and other cryptocurrencies “very dangerous animals,” he also warned of coins backed by fiat currencies, such as Facebook’s diem. He believes that “there is inherent instability in the function of these coins” due to potential fluctuations in its reserves.
Board members revealed that the European Central Bank has tested a mechanism that separates identity from payment details and small offline payments, where data is only recorded in the wallets of the sender and receiver. Such transfers (for example up to 100 Euros) can be done using Bluetooth. “For very small amounts, we can allow truly anonymous payments, but in general, confidentiality and privacy are different from anonymity,” Fabio Panetta emphasized. He detailed that most transactions will be inspected to prevent money laundering, financing of terrorism or tax evasion.
What are your expectations for the future of the digital euro project? Share your thoughts in the comments section below.
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