European Central Bank to introduce improved privacy measures for digital euro

The European Central Bank (ECB) has pledged to introduce upgraded privacy measures for the digital euro, guaranteeing robust data protection and privacy standards.

The proposed regulation aims to establish a single access point to verify users’ digital euro holdings, known as the holding limit.

In collaboration with the European Data Protection Board (EDPB) and the European Data Protection Supervisor (EDPS), the ECB has put forth recommendations to uphold stringent personal data protection.

These recommendations include processing only essential personal data, avoiding excessive centralization of such data, and introducing a so-called privacy threshold for online transactions to curb tracing for anti-money laundering purposes.

What is the digital euro?

The digital euro is envisioned to facilitate electronic payments for individuals, both online and offline, while prioritizing privacy and data protection.

On Jan. 21, the ECB earmarked more than $700 million to advance the development of the offline digital euro. The move is part of a wider strategy to launch a digital euro — a European payment method that could be utilized for digital transactions across the eurozone at no cost.

Importantly, the Eurosystem — serving as the digital euro infrastructure provider — would be unable to discern the identities behind digital euro transactions, with only payment service providers possessing access to such information.

Amidst growing concerns about privacy, the ECB’s commitment to elevating privacy standards with the digital euro comes as a welcome relief to proponents of central bank digital currencies (CBDCs).

Offline transactions using the digital euro aspire to mimic the discretion of cash exchanges, safeguarding transaction details between payer and payee. Conversely, online transactions will involve the ECB handling a minimal set of pseudonymized data, primarily for essential functions like settlement, empowering users with unprecedented control over their information.

Designed with financial stability in fo

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Author: Ogwu Osaemezu Emmanuel

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