A sensor system comprising: a first capacitive sensor; a second capacitive sensor; an excitation circuit electrically coupled with said first and second capacitive sensors (28, 30), said excitation circuit being configured to apply an excitation voltage to each of said first and second capacitive sensors (28, 30), said excitation voltage being characterized by a first excitation voltage component (122, 138), a second excitation voltage component (124, 140), and a third excitation voltage component, said second and third excitation voltage components having opposite polarities, wherein said excitation circuit is configured to apply said first excitation voltage component (122, 138) to said first and second capacitive sensors (28, 30) in a differential-mode of operation, and apply said second and third voltage components (124, 140, 142) to said first and second capacitive sensors (28, 30) in a common-mode of operation; and a capacitance-to-voltage, C/V, converter electrically coupled with said first and second capacitive sensors (28, 30), said C/V converter being configured to generate a differential-mode output signal (126, 146) in response to an external stimulus and said first excitation voltage component (122, 138) applied to said first and second capacitive sensors (28, 30), and said C/V converter being further configured to generate a common-mode output signal (128, 148) in response to said second and third excitation voltage components (124, 140, 142) applied to said first and second capacitive sensors (28, 30); and a signal processing unit (74, 184) electrically coupled with said C/V converter, said signal processing unit (74, 184) being configured to extract a sense signal from said differential-mode output signal (126, 146), extract a diagnostic signal from said common-mode output signal (128, 148), and detect a fault condition in said sensor system (20, 208) when a difference between said sense signal and said diagnostic signal is outside a predetermined limit, wherein said differential-mode output signal (126, 146) and said common-mode output signal (128, 148) are output from said C/V converter as a data stream, wherein said signal processing unit (74, 184) comprises: a first filter circuit (76, 80, 188, 192) configured to receive said data stream and extract said sense signal from said data stream; a demodulator configured to receive said data stream and demodulate said data stream to produce a demodulated data stream; and a second filter circuit (84, 86, 198, 200) electrically coupled to said demodulator (82, 194) and configured extract said diagnostic signal from said demodulated data stream. a first capacitive sensor; a second capacitive sensor; an excitation circuit electrically coupled with said first and second capacitive sensors (28, 30), said excitation circuit being configured to apply an excitation voltage to each of said first and second capacitive sensors (28, 30), said excitation voltage being characterized by a first excitation voltage component (122, 138), a second excitation voltage component (124, 140), and a third excitation voltage component, said second and third excitation voltage components having opposite polarities, wherein said excitation circuit is configured to apply said first excitation voltage component (122, 138) to said first and second capacitive sensors (28, 30) in a differential-mode of operation, and apply said second and third voltage components (124, 140, 142) to said first and second capacitive sensors (28, 30) in a common-mode of operation; and a capacitance-to-voltage, C/V, converter electrically coupled with said first and second capacitive sensors (28, 30), said C/V converter being configured to generate a differential-mode output signal (126, 146) in response to an external stimulus and said first excitation voltage component (122, 138) applied to said first and second capacitive sensors (28, 30), and said C/V converter being further configured to generate a common-mode output signal (128, 148) in response to said second and third excitation voltage components (124, 140, 142) applied to said first and second capacitive sensors (28, 30); and a signal processing unit (74, 184) electrically coupled with said C/V converter, said signal processing unit (74, 184) being configured to extract a sense signal from said differential-mode output signal (126, 146), extract a diagnostic signal from said common-mode output signal (128, 148), and detect a fault condition in said sensor system (20, 208) when a difference between said sense signal and said diagnostic signal is outside a predetermined limit, wherein said differential-mode output signal (126, 146) and said common-mode output signal (128, 148) are output from said C/V converter as a data stream, wherein said signal processing unit (74, 184) comprises: a first filter circuit (76, 80, 188, 192) configured to receive said data stream and extract said sense signal from said data stream; a demodulator configured to receive said data stream and demodulate said data stream to produce a demodulated data stream; and a second filter circuit (84, 86, 198, 200) electrically coupled to said demodulator (82, 194) and configured extract said diagnostic signal from said demodulated data stream. a first filter circuit (76, 80, 188, 192) configured to receive said data stream and extract said sense signal from said data stream; a demodulator configured to receive said data stream and demodulate said data stream to produce a demodulated data stream; and a second filter circuit (84, 86, 198, 200) electrically coupled to said demodulator (82, 194) and configured extract said diagnostic signal from said demodulated data stream.