The European Central Bank (ECB) is making strides towards a digital euro, but the initiative is encountering delays due to privacy concerns surrounding small transactions. The European Data Protection Board (EDPB), led by Deputy Chair Irene Loizidou Nicolaidou, has advocated for the inclusion of a privacy limit in the upcoming legislation. This would inhibit tracking of transactions for purposes such as anti-money laundering and countering terrorism financing.
On Wednesday, the EDPB expressed apprehensions about the ECB's proposal for a digital euro, underlining potential risks of state control and capital flight from conventional banks. Nicolaidou proposed a "privacy threshold" that would exempt low-value transactions from anti-money laundering supervision as well as decentralized storage for data enforcing Central Bank Digital Currency (CBDC) limits.
The EDPB emphasized the need for robust privacy measures and data protection to maintain public trust in the new currency. The board also sought clarity on the responsibilities of the ECB and payment services providers concerning data protection and legal bases related to the issuance, distribution, and use of the digital euro.
The EDPB further accentuated the importance of choice between cash and digital euros. It stressed that strong privacy safeguards and data protection measures are crucial to gaining public trust in the new form of currency. These developments were reported by Huw Jones and edited by Bernadette Baum and Jane Merriman.
The European Commission's draft law supporting the digital euro project is currently awaiting ratification. The law's approval process has been delayed due to ongoing debates about anonymity concerns for minor transactions. The ECB's digital euro project continues to evolve as it seeks to balance innovation with privacy and security considerations.
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