A digital euro should be measured against cash in terms of its core components and should also be able to be used anonymously, my data protection officer. This is the relevant yardstick to find a balance between the fundamental rights concerned and to enable “full privacy protection for transactions of daily life”, emphasized the European Data Protection Board (EDPB) in letters published on Friday to the European Central Bank (ECB), the EU Commission, the European Parliament and the Council of Ministers.
Anonymous and pseudonymous
The EU data protection officer differentiates between anonymous use of the digital euro and a case “in which a natural person is identified or identifiable during use, even if the data is pseudonymized”. The decision on one of these models would “of course also depend on the political goals pursued and a number of public interests to be weighed up”. In principle, the digital euro should be designed in such a way “that a data protection function is possible that extends from the anonymization of at least part of the transactions to a high degree of pseudonymization of the data”.
The data protectionists demand that offline transactions can be carried out anonymously as possible in order to reduce the risks for the rights and freedoms of the data subjects such as tracking in the entire payment system. In the case of a “decentralized approach”, the data should be provided with tokens so that central monitoring is excluded. To do this, you bring local storage of digital coins on an end-user device or a digital wallet such as a smartphone or chip card into play.
Pilot project expected
The supervisory authorities indicate in the Write also to the principles of data minimization and purpose limitation to be complied with in accordance with the General Data Protection Regulation (GDPR). What is needed is a holistic assessment of the various aspects and the fundamental rights concerned, which in addition to data protection include financial and digital inclusion, freedom of movement and security.
The ECB is expected to launch a pilot project in July. ECB President Christine Lagarde expects the digital currency to come within the next five years. Fabio Panetta, one of the directors of the central bank, has already brought “anonymity vouchers” into play. Users could issue these in such a way that payments would “not be tracked by the system”. The institution is skeptical of “unlimited anonymity” and relies on the results of a consultation.