ECB Defends Digital Euro Privacy Design, Claims User Identities Cannot Be Identified

Members of the European Central Bank (ECB) Executive Board, Piero Cipollone, stated that the design of the digital euro will limit the transaction information accessible to the central bank. The central banking system will not be able to identify the users initiating or receiving payments; only commercial banks will be able to identify users to meet anti-money laundering requirements. When offline payments are used, transaction details will only be visible to the payer and the payee, and banks and the central bank will not have access to this information. Nevertheless, lawmakers, privacy advocates, and the cryptocurrency community remain concerned that government-issued digital currencies could expand the scope of financial surveillance. The United States has prohibited federal agencies from developing or promoting central bank digital currencies, and the House of Representatives is advancing related prohibitive legislation. The ECB views the digital euro as a tool to reduce Europe’s dependence on non-European payment service providers. Currently, the legislation for the digital euro has entered the negotiation phase between the European Parliament and the Council of the European Union, and if ultimately approved, the digital euro is expected to be issued as early as 2029.

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