ECB Promises Strong Privacy Protections for Digital Euro Amid Public Concerns

ECB officials say the planned digital euro will be built so the Eurosystem cannot trace individual users to their transactions, but civil society groups remain skeptical of those privacy claims.

The European Central Bank (ECB) is seeking to ease concerns that its proposed digital currency could become a vehicle for financial surveillance. ECB Executive Board member Piero Cipollone said the digital euro would provide privacy protections that go beyond those available through traditional bank transfers.

Cipollone said the Eurosystem would be structurally unable to associate a particular user with their digital euro payments, whether those payments are made online or offline.

He explained that conventional bank transfers make transaction information available to the parties involved. The digital euro, by comparison, is being designed to provide what he described as the highest level of privacy that current technology allows.

The assurances come amid growing criticism of central bank digital currencies. Opponents worry that CBDCs could give governments greater insight into citizens’ financial activity and potentially create new ways to influence how people spend their money.

Digital Euro Privacy Faces Scrutiny

Austrian digital rights organization Epicenter.works and several other civil society groups have questioned whether the proposed privacy measures provide sufficient protection.

In a joint statement earlier this month, the groups argued that the digital euro’s privacy guarantees depend too much on promises from institutions rather than technical safeguards. They cautioned that legal protections could be weakened during implementation, challenged or reinterpreted through court proceedings, or fail to be properly enforced.

Cipollone offered more detail on the ECB’s proposed privacy structure. He said offline digital euro payments would be completed directly between the sender and recipient, with the transaction information visible only to those two parties. That would make offline payments comparable to cash in terms of privacy.

Online payments would provide less anonymity. Banks would be able to identify their customers, although Cipollone said such information would be used for requirements including anti-money-laundering checks.

The ECB official also pushed back against suggestions that the digital euro would eventually eliminate physical money. He pointed to the central bank’s recently launched consultation on new euro banknotes as evidence that cash will remain available.

Cipollone said the ECB would have little reason to develop new banknotes if it intended to phase out physical currency.

The comments follow the European Parliament’s approval of digital euro legislation last month. The project is currently expected to launch in 2029.

ECB President Christine Lagarde has also reassured Europeans that digital euros and physical cash are expected to coexist, rather than the new currency replacing banknotes and coins.