The European Central Bank (ECB) is pushing back against privacy concerns surrounding its planned central bank digital currency (CBDC), insisting that the digital euro's architecture will sharply restrict the transaction information available to the central bank itself.

In an Aug. 10 interview published Monday, ECB Executive Board member Piero Cipollone said the digital euro's design would limit the amount of transaction information available to the central bank. "The Eurosystem would not be able to identify the users making or receiving payments," Cipollone said.

Only banks involved in transactions would be able to identify users, including for anti-money laundering purposes, while the Eurosystem would not be able to directly link specific individuals to digital euro payments, Cipollone explained. Offline digital euro transactions would go further still, leaving payment details available only to the payer and the payee — an arrangement the ECB has pitched as offering cash-like anonymity.

The assurances have not settled the broader debate. Lawmakers, privacy advocates and crypto community members have warned that government-issued digital currencies could expand financial surveillance. The European project is unfolding amid a global wave of CBDC work: more than 130 countries and currency unions, representing roughly 98% of global GDP, are studying some form of central bank digital money, according to the Atlantic Council's CBDC tracker, and retail CBDCs are already live in the Bahamas and Nigeria, while China's e-CNY remains in large-scale trials.

In the United States, President Donald Trump prohibited federal agencies from developing or promoting a CBDC in January 2025, citing risks to financial stability, individual privacy and US sovereignty. House lawmakers have separately advanced the Anti-CBDC Surveillance State Act, which seeks to prohibit the Federal Reserve from issuing a CBDC.

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Digital euro pitched as payment sovereignty tool

Beyond privacy, the ECB has presented the digital euro as part of Europe's effort to strengthen its payments infrastructure and reduce reliance on non-European payment providers.

In an April public lecture held in Latvia, Cipollone said Europe's reliance on non-European payment providers creates a strategic vulnerability. He noted that two-thirds of euro-area card transactions are governed by non-European companies, and said the digital euro could reduce that dependence and provide European-controlled payment infrastructure. Under the plans presented so far, the digital euro would be legal tender across the 20 countries that share the euro, complementing physical cash rather than replacing it.

On the legislative track, the European Parliament's Economic and Monetary Affairs Committee backed its position on the digital euro legislation in June, while lawmakers later cleared the proposal for negotiations with the Council in July. Those talks are expected to address core design parameters, including the ceiling on how much digital euro individuals could hold — a cap officials have floated to prevent large volumes of deposits migrating out of commercial banks, a concern euro-area lenders have raised throughout the project.

The ECB has said a digital euro could be issued as early as 2029, provided the necessary legislation is adopted and the project clears its remaining technical and operational stages. The timetable builds on a two-year investigation phase that concluded in October 2023, after which the ECB entered a preparation phase focused on finalizing the scheme's rulebook and selecting the payment providers that will test the system in its pilot.

Magazine: The digital euro: Surveillance money, or a better alternative to cash?