ECB says it won’t be able to identify users as digital euro legislation advances

ECB Executive Board member Piero Cipollone said the Eurosystem would not be able to identify individuals behind digital euro transactions, as European lawmakers move to advance legislation that could allow the digital euro to launch as early as 2029.

The comments come amid intensifying global debate over central bank digital currencies, including a U.S. executive order barring efforts to create an American CBDC.

“The Eurosystem would not be able to identify users making or receiving payments,” Cipollone said, according to the ECB.

The distinction is important. While payment service providers and banks would still need to identify customers and comply with anti-money laundering and know-your-customer requirements, the Eurosystem would receive transaction information in a form designed to prevent it from connecting payments to individual identities.

ECB puts privacy at the centre of digital euro design

The ECB’s approach to digital euro privacy rests on a separation between the infrastructure operated by the Eurosystem and the customer information held by payment service providers.

For online transactions, the ECB says it would see encrypted or pseudonymous information rather than the identities of the payer and recipient. The banks or other payment service providers serving customers would retain the information needed to meet legal obligations, including anti-money laundering rules.

Offline payments are designed to go further.

The ECB says an offline digital euro transaction could take place between devices without an internet connection, with personal transaction details remaining known only to the payer and recipient. The model is intended to provide privacy closer to physical cash while retaining the convenience of a digital payment instrument.

That architecture is central to the ECB’s argument that digital euro privacy would not automatically translate into unrestricted government surveillance.

The institution has repeatedly described privacy as a core design principle rather than an additional feature. Its latest public material says the digital euro is being developed under a “privacy by design” approach, with data minimisation and strict limits on information access built into the system.

Global CBDC backlash raises the political stakes

The ECB’s assurances come against a very different backdrop in the United States, where CBDCs have become politically controversial.

President Donald Trump signed an executive order on Jan. 23, 2025, directing US agencies to stop actions aimed at establishing, issuing or promoting a US CBDC. The order cited concerns including financial-system stability, individual privacy and US sovereignty.

US lawmakers have also pursued legislation aimed at preventing the Federal Reserve from issuing a CBDC. The proposed Anti-CBDC Surveillance State Act would bar Federal Reserve banks from directly or indirectly issuing a central bank digital currency to individuals.

That contrast highlights the political challenge facing European policymakers. For critics, assurances about digital euro privacy may not fully resolve concerns about how a central-bank-controlled payment system could evolve over time.

For the ECB, however, the proposed system is fundamentally different from a centralised database giving authorities a real-time view of every citizen’s spending.

The institution argues that privacy protections would coexist with safeguards against financial crime. Payment providers would continue carrying out required compliance checks, while the Eurosystem would not be able to directly connect individual users with their online digital euro payments.

Digital euro is also about European payment sovereignty

Privacy is only one part of the ECB’s case for introducing the digital euro.

Cipollone has increasingly framed the project as a strategic response to Europe’s dependence on foreign payment networks. In a 2026 speech, he said two-thirds of euro-area card transactions are governed by the business rules of non-European companies, leaving European consumers and merchants dependent on infrastructure controlled outside the bloc.

That dependence matters as cash usage declines and more commerce moves online. A central-bank-backed digital payment system could give Europeans a public payment option that operates across the euro area without relying entirely on non-European private networks.

The European Parliament moved the project forward in July, voting 416-169, with 22 abstentions, to open negotiations with the Council on legislation establishing the digital euro.

The ECB says it could be ready for a potential first issuance in 2029 if the necessary legislation is adopted during 2026.

2029 target puts privacy claims under greater scrutiny

The debate over digital euro privacy is therefore moving from theoretical discussions into the legislative and technical stages of the project.

The ECB has already published a new draft version of its digital euro rulebook and continues to develop the infrastructure required for potential issuance. The proposed system would work both online and offline, giving users different payment options depending on connectivity and privacy requirements.

The political question now is whether those safeguards will remain sufficiently strong as lawmakers finalise the legislation and the technology moves toward deployment.

For the ECB, digital euro privacy is a core condition for public acceptance. For critics of CBDCs, the issue is broader: they question whether privacy protections embedded in legislation and technology today can prevent future governments or institutions from expanding financial surveillance tomorrow.

The ECB’s response is that the digital euro should complement cash, not replace it, while providing Europeans with a sovereign digital payment option. If the project reaches its current timetable, that argument will face its biggest real-world test before the end of the decade.

For now, digital euro privacy remains one of the most consequential battlegrounds in Europe’s CBDC debate — alongside financial sovereignty, consumer choice and the future role of cash.