The digital euro must be as privacy-friendly as cash, according to the French privacy regulator CNIL. He argues that the current model for the digital currency does not meet the concerns of European privacy regulators and that there are only six months left for the development of a privacy-friendly digital euro.
At the moment, the digital euro is still in the research phase at the European Central Bank (ECB). This phase is expected to last until the autumn of 2023. The European Commission will present a legislative proposal for the introduction of the digital euro in the second quarter of this year. The French privacy regulator already warned last year that privacy will be the biggest challenge of the project. At the end of last year, the European privacy supervisors united in the EDPB warned against tracking transactions in the digital euro.
In addition, the currency must be designed as much as possible like the physical euro. As part of the research phase, the ECB presented its first choices regarding the architecture of the digital euro last September. This specifically concerns the confidentiality of transactions. An approach has been chosen in which transactions take place online and are fully traceable by an intermediary. Something that the European privacy regulators advised against. The EDPB therefore came up with recommendations.
For example, the digital euro should also be usable in an offline digital wallet without an internet connection, and peer-to-peer payments should be possible from the start. Furthermore, transactions below a certain amount should not be tracked, both for online and offline users. The transaction data then remains on the user’s system and cannot be tracked by the Eurosystem or intermediaries. A digital euro that does not comply with the principles of necessity and proportionality in terms of data collection and processing does not comply with both GDPR and the Charter of Fundamental Rights of the European Union. It calls for a broad public debate at both European and national level.
“It is up to citizens and their representatives to choose now what kind of digital euro they want and how this digital euro protects their data and freedoms.”