Digital euro and privacy

An offline digital euro payment runs directly between two devices. On its privacy page the ECB says that only the payer and the payee would know the details. Article 37 of the Commission proposal states that transaction data of offline payments are not retained by payment service providers or by the central banks.

What remains visible is the funding and defunding of the offline balance. Providers keep records of the amount, the device, the time and the account numbers and hand them to financial intelligence units on request. A separate limit for offline holdings is meant to keep the money laundering risk low.

For online payments the proposal splits the data. Banks and payment providers process what they need for onboarding, holding limits, fraud checks and sanctions screening (Article 34). The ECB and national central banks process account numbers, amounts and aliases for settlement, but in a form that does not identify individual users directly (Article 35).

Piero Cipollone of the ECB Executive Board said in an interview the ECB published that the Eurosystem would not be able to identify the people making or receiving online payments. The ECB also says the digital euro would never be used for commercial purposes, and that a bank may use payment data commercially only with the user's explicit consent.

The European Parliament adopted its negotiating position with stronger privacy wording than the Commission text: transactions would be verified without exposing personal data, and data would be processed only as far as the system needs it. The Council agreed its position earlier. The final balance between privacy and anti-money laundering is set in the negotiations between the two, covered on digital euro legislation.

For banks the practical question is the data model. They keep their know-your-customer duties, receive no data on offline payments and must keep the digital euro data separate from any commercial use. Anti-money laundering in Germany covers the duties that continue to apply.

According to the ECB and the proposal, the Eurosystem would only see pseudonymized data that does not identify you directly. Offline payments would not be recorded by the central banks at all.

No. Offline payments would offer privacy similar to cash, but funding an offline balance and all online payments run through a provider that knows its customer. Full anonymity is ruled out by anti-money laundering law.

Your bank or payment provider sees what it needs for its legal duties, as with a card or transfer today. The central banks see pseudonymized settlement data. Merchants see what they see for any digital payment.