The European Central Bank has defended the privacy framework of its planned central bank digital currency, the digital euro, as regulators worldwide scrutinize the privacy implications of CBDCs.
In an Aug. 10 interview, ECB Executive Board member Piero Cipollone said the Eurosystem would not be able to identify users making or receiving payments under the digital euro’s design. Only the banks involved in transactions would retain that capability, including for anti-money laundering compliance. Offline transactions would further restrict data visibility to only the payer and payee.
The ECB’s assurances come amid growing skepticism from lawmakers, privacy advocates and parts of the crypto community, who argue that government-issued digital currencies could expand financial surveillance. In the U.S., President Donald Trump issued an executive order in January 2025 prohibiting federal agencies from developing or promoting a CBDC, citing risks to financial stability, individual privacy and U.S. sovereignty. Separately, House lawmakers advanced the Anti-CBDC Surveillance State Act, which seeks to block the Federal Reserve from issuing a CBDC.
Beyond privacy concerns, the ECB has framed the digital euro as a strategic tool to bolster Europe’s payments infrastructure and reduce reliance on non-European providers. In an April lecture, Cipollone highlighted that two-thirds of euro-area card transactions are processed by non-European companies, creating a vulnerability in Europe’s financial autonomy. The digital euro, he argued, could provide a European-controlled alternative.
The European Parliament’s Economic and Monetary Affairs Committee endorsed its position on digital euro legislation in June, and lawmakers cleared the proposal for negotiations with the Council in July. The ECB has indicated a digital euro could be issued as early as 2029, pending final legislative approval and the completion of technical and operational milestones.
The central bank has also selected 36 payment providers to participate in testing phases ahead of a planned 2027 pilot program.
