The European Central Bank said Wednesday that the planned digital euro will provide users with a maximum level of privacy [1, 2].
This announcement comes as the bank attempts to address growing surveillance concerns and criticism from civil society regarding financial privacy in the digital age [1, 2].
ECB board member Piero Cipollone and other officials said that the Eurosystem will be structurally unable to link individual users to their specific transactions [1, 2]. This design is intended to separate the central bank from the personal data of the citizens using the currency [1].
However, the privacy protections do not extend to all parties involved in a payment. The ECB said that banks processing the payments could still see transaction details [1, 2]. This creates a distinction between the central authority's visibility and that of the commercial financial institutions facilitating the transfers [1].
The move is a response to fears that a central bank digital currency could become a tool for state surveillance [1, 2]. By limiting the Eurosystem's access to user data, the ECB aims to mirror some of the privacy benefits associated with physical cash [2].
Officials said that the digital euro would offer more privacy than regular bank transfers currently available to consumers [1]. The structural inability of the central bank to track individuals is a core part of the project's current architectural plan [1, 2].
“The Eurosystem will be structurally unable to link users to individual transactions.”
The ECB is attempting to balance the regulatory requirements of a digital currency with the public's demand for anonymity. While removing the central bank from the data chain reduces the risk of direct state surveillance, the continued visibility of transactions at the commercial bank level means that total financial privacy remains elusive for the end user.
