According to EU ministers, the digital euro might include additional privacy safeguards

Legislators in the European Commission believe that the Digital Euro — the EU's planned Central Bank Digital Currency (CBDC) — might improve privacy for small-value transactions.

With the possibility of CBDCs playing a significant role in global finance very soon, the European Union (EU) is working hard to develop a solution that relates payment innovations to its anti-money laundering (AML) laws – standards that will apply to both the Digital Euro and private cryptos.

However, no formal decisions have been made inside the EU on whether a Digital Euro would be issued shortly. On Monday, EU finance ministers stated that the Digital Euro will improve privacy for smaller transactions. They did, however, state that perfect anonymity is still out of the question.

Irish Finance Minister Paschal Donohoe told the press that Digital Euro should "accommodate privacy concerns." He also stated that the new laws will "counteracting the use of digital euros for unwarranted purposes."  Donohoe added"A risk-based approach could be followed allowing for more privacy for less risky and smaller transactions and vice versa." 

According to Fabio Panetta, a key European Central Bank (ECB) executive board member, the Digital Euro "would provide people with a level of privacy equal to or higher than that of private digital solutions."

The European Commission's legislators will conduct additional consultations on legislation needed to underpin the new Digital Euro. However, the Commission warned that an overly centralised system might facilitate eavesdropping and continue to be a threat to mass surveillance, according to CoinDesk. Furthermore, EU legislators have proposed AML checks for cryptocurrency and stablecoins.

"A completely anonymous Digital Euro is not desirable," stated Paolo Gentiloni of the European Commission. The European Parliament enacted a contentious law on digital assets last week that requires exchanges to gather the sender and recipient's private information even for small-value transactions.

The ECB is also working on a mechanism to make Digital Euro available as a payment option. "We are getting a clearer picture of what citizens and merchants want, so we can fine-tune all the design features of a digital euro before any potential issuance. Legislators have a key role to play."

Christine Lagarde, President of the European Central Bank (ECB), previously stated (via CoinDesk) that the ECB needed to hasten the Digital Euro process.