Making the Digital Euro Truly Private

The European Central Bank (ECB) is actively working on developing a central bank digital currency (CBDC) known as the digital Euro, with a significant focus on ensuring privacy for users. The ECB’s recent blog post, “Making the Digital Euro Truly Private,” outlines their approach and the principles guiding this development.

The ECB emphasizes that privacy is a fundamental right and must be preserved even in the context of digital currencies. They acknowledge the delicate balance between providing privacy and preventing illicit activities such as money laundering and terrorist financing. To address this, the ECB has proposed a tiered privacy model.

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Key Points of the Digital Euro’s Privacy Features

1. Tiered Privacy Model

The digital euro will offer varying levels of privacy depending on the transaction type and amount. Smaller, everyday transactions might have higher privacy levels, akin to cash payments, where user identification is minimized. In contrast, larger transactions will require more stringent identity verification to comply with anti-money laundering (AML) and counter-terrorism financing (CTF) regulations.

2. Anonymity and Traceability

The ECB is exploring technologies that ensure a high degree of privacy while maintaining necessary traceability. This includes pseudonymization techniques, where personal data is not directly linked to transactions, reducing the risk of privacy breaches.

The ECB is working closely with European and international regulatory bodies to ensure the digital euro complies with existing privacy laws and financial regulations. They are committed to transparency and accountability in how data is handled and protected.

4. Public Consultation and Feedback

The ECB has actively sought input from the public, financial institutions, and other stakeholders. They conducted a public consultation in which privacy emerged as a top concern among respondents. The feedback has been integral to shaping the design and features of the digital euro.

5. Technological Safeguards

Advanced cryptographic methods and secure hardware are being considered to protect users’ data. The ECB is also exploring decentralized technologies to enhance privacy and security, ensuring that the digital euro remains resilient against cyber threats.

Benefits and Challenges

The digital euro aims to provide a secure, efficient, and privacy-respecting digital payment option, complementing cash rather than replacing it. However, the ECB acknowledges challenges, particularly in balancing privacy with the need for financial oversight and regulatory compliance.


The ECB’s development of the digital euro with a strong emphasis on privacy reflects their commitment to protecting user data while fostering innovation in digital payments. As the project progresses, the ECB will continue to refine its approach based on ongoing consultations and technological advancements to ensure the digital euro meets the privacy expectations of European citizens.

For further details, you can read the full article on the ECB’s website

Insights from Treasury Experts

We thought it would be valuable to get perspectives from two Treasury professionals, Lorena Sandroni and Sebastian Muller Bosse, who are also Treasury masterminds board members

Q: The article published by the ECB states that the digital euro will be more private than current digital payments. Do you think it will? Do you have concerns? How about the limitations of use (maximum use amount per person: €3,000)?

Sebastian-Muller-Bosse_Treasurymastermind Board member

Sebastian Muller Bosse, Manager Administration & Operations at Finance & Treasury Services GmBH, Comments

The introduction of the digital euro will face challenges, as there are already many competing products that are established and convenient. The biggest advantage I see is the lower transaction fees (compared to PayPal and others), which will be especially beneficial for merchants. Unfortunately, the end consumer, who is the primary user of the digital euro, will notice this less, unless the merchant passes on the savings to the consumer.

The EU is not particularly known for innovation and does not have a large marketing department. The EU often appears cumbersome, and good, factual arguments can quickly fall victim to the halo effect. Additionally, the fact that it is a (supra-)governmental regulation can cause unease and mistrust among many. Many prefer to trust private providers that they already use for other products, such as Alipay, Google Pay, Apple Pay, or WeChat. The EU needs to do a lot to build acceptance and trust compared to these big brands, especially among Germans who love their cash.

Privacy concerns also pose a significant challenge. For users, verifying privacy is difficult since it relies on technical mechanisms that cannot be easily checked. Privacy is more about perceived privacy than actual privacy; otherwise, many more people would use technologies like Telegram instead of WhatsApp or would stop using Facebook. However, only a few people really read the terms of service and understand what happens with their data. As a new player in the market, the EU can claim that it is more private, but it must prove this convincingly to make people perceive the other players as “less secure.” This will be a tough call.

In other parts of the world, a digital currency has already been established. For example, China has already introduced a digital central bank currency (Central Bank Digital Currency, CBDC) with the e-yuan. However, it is much more common there to pay with a mobile phone in a digital wallet, which is the most common method among consumers. The hurdle of transitioning from cash to card payments and then to mobile payments is comparatively large in the EU. People are not used to it and may also have security concerns.


Lorena Sandroni, Head of Treasury at PayU, Comments

The ECB seems to be expressing the support to endorse that individual will be able to obtain digital euros through their PSP. It seems to be a direction to ensure that central bank money is a crucial part of the payment system and build trust in the euro currency. In this sense, PSP are expected to play a crucial part for individuals to obtain digital euros, however the main challenges will be PSP ensuring robust cybersecurity measures, scalability, and compliance with regulatory requirements(KYC/AML-ECB guidelines ). All this without compromising the customer experience but also adding interoperability between different PSP to create a seamless process for customers to be able to transact digital euros across PSP. Liquidity management guaranteeing sufficient reserves and optimizing liquidity flows will be crucial.

Regarding e-Naira . Balancing innovation, security, and compliance will be key for successful adoption. The regulatory frameworks will play a pivotal role in shaping the adoption of e-Naira by PSPs. PSPs need to develop robust products and infrastructure to integrate e-Naira effectively. Currently e-wallets services play a crucial role in the Country and in the whole continent, in providing immediate transactions and expanding financial access. They bridge the gap for individuals who previously lacked access to traditional banking services. However, these e-wallets rely on traditional currency as their underlying value, current regulatory frameworks create challenges for these kinds of companies to manage liquidity of the underlying value. Counterparty risk is a concern. Safeguarding against fraud, theft, and operational risks and bank default is crucial.

Comments from Treasury Masterminds User

Franklin, a member of Treasury Masterminds, comments on the adoption of the digital currency (e-naira) in his country, Nigeria.

The adoption rate of the e-Naira in Nigeria has been somewhat mixed. There are several factors affecting its uptake. One of the main issues is the level of public awareness and trust. Many Nigerians are still not fully informed about what the e-Naira is or how it functions. Additionally, there is general skepticism regarding digital innovations from the government, primarily due to concerns about privacy and security.

Also, the technological infrastructure needed to support widespread use of the e-Naira is still developing, especially in rural areas where internet access and electricity can be unreliable. This limits how effectively people can use the digital currency. The e-Naira aims to reach the unbanked and underbanked populations, but progress has been slow. Many in these groups are hesitant to adopt new financial technologies due to a lack of understanding or distrust of formal banking systems.

Then, fluctuating economic conditions and high inflation in Nigeria have also played a huge role in the cautious reception of the e-Naira. People are concerned about the stability and practicality of adopting a new form of currency under these conditions.

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