Digital euro promises cash-like privacy, ECB says

European Central Bank Executive Board member Piero Cipollone defended the digital euro's proposed privacy protections in an interview published Aug. 24, saying the Eurosystem would be unable to connect individual users with specific payments.

ECB says the digital euro would limit user tracking

Cipollone said the digital euro would provide stronger privacy than conventional bank transfers because the Eurosystem would not receive information allowing it to identify individual users.

"The digital euro guarantees the maximum level of privacy that current technology can offer," Cipollone claimed.

Under the proposed design, online transactions would be processed through banks and other payment service providers. Those companies could identify customers when performing anti-money laundering checks, but the Eurosystem would receive pseudonymized settlement information.

The ECB's updated guidance says it would not directly connect that information with a particular person. This protection would not make online digital euro transactions anonymous to the customer's bank.

The digital euro would operate on a centralized settlement platform rather than a public blockchain. The Eurosystem would process and verify holdings and settlements while payment providers handled customer-facing accounts.

Offline digital euro payments would resemble cash

Offline payments would take place directly between devices, such as smartphones or payment cards. The ECB says personal transaction details would remain known only to the payer and recipient.

Anti-money laundering controls would instead apply when users added or withdrew money from an offline wallet. The ECB compares that process with checks performed when customers deposit or withdraw physical cash.

Offline functionality would also allow payments during network disruptions. Users would need to fund their offline balance beforehand, meaning available spending would be limited to the value stored locally on their device.

Cipollone also rejected claims that the digital euro would replace cash. He pointed to the ECB's work on redesigned banknotes as evidence that physical and digital euros are intended to coexist.

Privacy groups want technical guarantees

Austrian digital rights group epicenter.works and partner organizations remain unconvinced that the current framework provides enough enforceable protection.

The draft's privacy safeguards "rely too heavily on institutional assurances," the organization warned.

The group's statement called for a privacy threshold covering routine payments, public documentation of core mechanisms and open-source code where possible. It also backed zero-knowledge proofs, threshold cryptography and authenticated encryption.

Civil society groups argue that laws and policies can be weakened during implementation or reinterpreted by courts. Technical controls would make it harder for institutions to collect information beyond what the system permits.

The European Parliament's negotiating position includes privacy-by-design measures and offline payments. As crypto.news reported, lawmakers also proposed zero-knowledge technology for transaction verification.

EU negotiations will determine the final protections

The European Parliament did not give final approval to the digital euro regulation in July. Members instead authorized negotiations with the Council after approving Parliament's position on July 9.

The Council adopted its negotiating position in December 2025. Both institutions must now agree on a common text before separately approving the regulation.

The ECB says it could be ready for a potential first issuance during 2029 if lawmakers adopt the necessary legislation by the end of 2026. Its Governing Council would make a separate decision on whether issuance should proceed.

Before then, a 12-month pilot is planned for the second half of 2027. In related coverage, the ECB selected 36 payment providers for the pilot, including banks and non-bank companies.

The pilot will test online and offline transfers, merchant payments and the user experience. Its results and the final EU legislation will determine whether the ECB's privacy promises become enforceable features of the finished system.