ECB Defends Digital Euro Privacy, Says Eurosystem Can’t Identify Transaction Parties

The European Central Bank has stepped up its defense of the digital euro’s privacy design as concerns mount globally that central bank digital currencies could expand financial surveillance.

Cointelegraph reported on Aug. 24 that Piero Cipollone, a member of the ECB’s Executive Board, said in an Aug. 10 interview that “the Eurosystem cannot identify users who send or receive payments.”

Cipollone said only banks involved in a transaction would be able to identify the parties to it, including for anti-money laundering purposes. The Eurosystem, he added, would not be able to directly link digital euro payments to specific individuals. In offline digital euro transactions, payment information would be visible only to the payer and the recipient.

Privacy concerns, however, have not subsided easily. Lawmakers, privacy advocacy groups and the crypto community have warned that government-issued digital currencies could broaden financial surveillance.

In the US, President Donald Trump in January last year barred federal agencies from developing or promoting a CBDC, citing concerns over financial stability, personal privacy and national sovereignty. In the House of Representatives, lawmakers are separately advancing the Anti-CBDC Surveillance State Act, which would prohibit the Federal Reserve from issuing a CBDC.

Beyond privacy, the ECB has also presented the digital euro as a way to strengthen Europe’s payments sovereignty. In an April speech in Latvia, Cipollone said two-thirds of euro-area card transactions are processed by non-European companies. He said a digital euro could reduce that dependence and help build payment infrastructure controlled by Europe.

The legislative process is also moving forward. The European Parliament’s Committee on Economic and Monetary Affairs finalized its position on the digital euro bill in June and approved the start of negotiations with the Council in July. The ECB has said it could issue the digital euro as early as 2029 if the necessary legislation is passed and the technical and operational work is completed.