My parents house is like that, but there’s a wall with a wide doorway into the area with the vanity, so it’s open but also easy to close off by just putting a curtain rail up. It’s also oriented to the room such that if you only use enough light at the vanity to wash your hands for a midnight potty run, it really isn’t enough to bother someone in the bed if you place the bed sensibly. Getting ready in the morning would be trickier if you needed to do makeup and so on so needed proper lighting, so that’s where a screen or a curtain would come in.

I'm assuming you will be keeping those beautiful drapery panels? They help a great deal with that side-gap you sometimes get with blinds, pleated or wooden. We've got 2" wood blinds and get complete privacy at night...because our house sits way up high and there are no neighbors who can see "down" at our windows. If your neighbors don't have any windows above yours and you have your blinds angled "up" at night, you'll be fine. I've got those blind over my garden tub window(looks just like your setup) and I can clearly see the sun/moon while enjoying a bath with the blinds "closed" in the up position. So, if I can see out... Like Pal said, be careful! We used top-down/bottom-up pleated shades in the FR of our old house because the windows went all the way to the floor and the entire room could be seen clearly from the street at night. They are great. I'd seriously consider them in your window for a number of reasons. First, they are more energy efficient and on cold days can be left closed all the way if you choose. Second, they can be adjusted to whatever height and left alone (cafe height). Lastly, I don't think that water droplets will do as much damage to them. My wood blinds are starting to show some spots where the water has splashed them and they are peeling/looking a bit ratty. I'm thinking that plantation shutters would look nice too, but may obscure too much of the view for your liking.

[https://www.houzz.com/photos/phuninthesun-phvw-vp~101138981[(https://www.houzz.com/photos/phuninthesun-phvw-vp~101138981) I haven't quite figured out how to use Houzz properly, but I think you should forget curtains for this window and put in some roman shades. You can pick whatever fabric you want! This link should show you how I would put the shades on. If not, just look at my ideabooks and I created a sketch under your username. Let me know if you can't see it!

I would not put anything there. I don't like toilet areas that are dressed up. I would paint the window if possible. If you need privacy you can get static cling window film. There are plain and lots of colorful choices available. https://www.homedepot.com/p/Brewster-47-in-x-24-in-Dogwood-Premium-Window-Film-PF0700/300573711