Lawmakers have voiced substantial resistance to the digital euro due to apprehensions about potential government surveillance. The European Union’s blueprint for a digital euro must steer clear of excessive concentration of power within the European Central Bank, cautioned the EU’s data privacy regulator in a statement released on Wednesday.
Digital Euro’s Centralized Approach
The ECB is scheduled to make a decision later on Wednesday regarding the advancement of its plans for a central bank digital currency (CBDC), which has sparked considerable apprehensions about the potential for government control. Irene Loizidou Nicolaidou, the Deputy Chair of the European Data Protection Board, emphasized the importance of a high level of privacy and data protection in fostering trust among citizens for this new digital currency. She expressed her desire to ensure that data protection principles are integrated into the early design phases of the digital euro, both for online and offline use.
While the ECB aims to restrict the maximum amount of central bank digital currency (CBDC) an individual can possess to prevent a mass exodus of assets from the traditional banking system, Nicolaidou expressed her preference for a more decentralized approach to storing the necessary information for enforcement.
Nicolaidou also advocated for the implementation of a “privacy threshold,” beneath which no transactions would be subject to tracing for anti-money laundering purposes. She stressed the importance of providing clearer insights into the operation of the fraud prevention mechanism.
The European Data Protection Board (EDPB) is responsible for overseeing the strict privacy regulations of the European Union, including the General Data Protection Regulation (GDPR). Their perspective is expected to carry significant weight with lawmakers who are already concerned about privacy implications.
Mairead McGuiness, the financial services commissioner, emphasized that safeguarding the privacy of citizens remains a top priority as the European Commission works towards potentially introducing a digital euro. This statement was made in response to the privacy watchdog’s position and comes in light of the Commission’s proposal for legislation to support the central bank digital currency in June.