Central Bank Digital Currency: How can Federal Agencies Prepare?

By Alma Angotti, Ruba Elbasha, Chris Clarke, Tom Rhoads

In March 2022, President Biden issued Executive Order (EO) 14067 Ensuring Responsible Development of Digital Assets, which placed an urgency on research and development efforts into the potential design and deployment options of a US central bank digital currency (CBDC). The EO details key policy objectives to promote the responsible development of digital assets and CBDCs: protecting US consumers, investors, and businesses; mitigating risks of illicit finance; protecting the US financial system; reinforcing US leadership in the global financial system and financial innovation; and Promote access to safe and affordable financial services.

Implementation of CBDC is being considered across the globe. The Atlantic Council reported that “as of December 2022, 114 countries were exploring the feasibility of a CBDC representing over 95 percent of global gross domestic product.” In line with most western European countries that are in the development stage of CBDC, the Federal Reserve Banks of Boston and of New York announced a pilot to explore the development of a US CBDC. The announcement of these pilots occurred shortly after the FTX cryptocurrency exchange collapse, which may have reduced confidence in the cryptocurrency industry but did not halt these two Federal Reserve Banks’ pilot programs.


CBDC vs. Cryptocurrency: What is the Difference?

There is often confusion between CBDC and cryptocurrency, and, at times, they are used interchangeably. It is important to understand the two different concepts, considering the different implications in regulation, centralization, privacy, and security.



  • Definition — A digital currency in which transactions are verified using encryption, and records are maintained on a blockchain. In layman's terms, a blockchain is simply a digital ledger of transactions. 
  • Centralization — Decentralized with no governing authority.
  • Volatility — Often used for investing with a high risk of volatility.
  • Privacy — Quasi anonymous with a high degree of privacy. Public blockchain - anyone can view, download, and participate in the network. Bitcoin is an example of a public blockchain.
  • Safety & Regulation — Unregulated. Not backed by an entity. No formal consumer protections.
  • Type — Not applicable.



  • Definition — The digital form of the existing fiat currency issued by central banks.
  • Centralization — Issued by the central bank.
  • Volatility — Stable. Not an investment tool.
  • Privacy — Depends on how the system is designed. Accounts and data could be housed at central banks or third-party institutions. Public or a private (permissioned) blockchain - Private blockchain is operated by a single entity that controls who can view the network. You must be invited and cannot view transaction data on the open internet.
  • Safety & Regulation — Backed by the Federal Government. EO 14067 stipulates that U.S. CBDC should include appropriate protections for custodian and other.
  • Type — Retail, intended for general purpose use as a new form of digital cash, and Wholesale, used for settling interbank accounts.


Will the U.S. adopt a CBDC?

The implementation of a CBDC has both strong advocates and opponents. While the Biden Administration emphasized financial inclusion for all Americans as one of the objectives and benefits of a CBDC, many appear uneasy with the control the US Treasury and the Federal Reserve could have over CBDC transactions, and the possible implications for financial privacy. Although the administration has not yet decided whether it will implement a CBDC, some consider the White House’s publication of the Comprehensive Framework for Responsible Development of Digital Assets on September 16, 2022, as a sign that a US CBDC will likely occur in the future.


How can Federal Agencies prepare for future adoption of CBDC?

Adoption of a US CBDC would materially impact federal agencies’ business processes and IT systems. As such, federal agencies would benefit from a proactive approach to be prepared for a possible CBDC. Key considerations for research and questions to consider include:

Internal Control and Financial Management

  • What roles will various agencies have in a CBDC implementation and do those agencies understand the implications of those roles?
  • What are the new operational, compliance, and financial reporting risks associated with a CBDC? Whose role is it to monitor and proactively mitigate such risks before and after implementation?
  • What changes to internal control and risk management program approaches need to occur?
  • How will a CBDC impact governmentwide and agency-level financial reporting?
  • How will agencies prepare for CBDC receipts and disbursements to be audited?
  • What new business processes, systems, and associated internal controls need to be designed, including identifying roles and responsibilities for each?
  • What policies, procedures, and standard operating procedures need to be created and/or updated?
  • What additional skills and human resources would be required?



  • How would a CBDC impact current IT systems, and what changes need to be made to accommodate receipts and disbursements of CBDC?
  • Which IT systems or which parts of the financial system of record will be prioritized for CBDC implementation? Or will the blockchain serve as the financial system of record?
  • Will there be a need for new software applications?
  • Will interfaces need to be updated, or will there be a need for new systems?
  • What are the roles of the Office of Management and Budget and the Treasury Department in system changes?


Cybersecurity and National Security

  • What are the potential cybersecurity risks associated with a U.S. CBDC? What is the expected impact and what is the plan to mitigate the risks?
  • What additional measures need to be put in place to protect the U.S. Government and the public from CBDC-focused cyberattack risks?
  • Could a foreign government with its own CBDC potentially block the local CBDC transactions of U.S. companies in that country?
  • How can one avoid criminal organizations with illegally obtained cryptocurrencies from using clean profile CBDC holders to operate on their behalf?



While the US has not formally adopted a CBDC yet, CBDC pilots across the globe could be an indication that the implementation of a US CBDC is likely. Investing time upfront, taking a deliberate and coordinated approach, and looking at the full impact of a US CBDC on agencies’ missions and operations could make for a successful and smooth implementation.


How can Guidehouse help?

Implementation of a US CBDC can be daunting, especially considering the many questions about roles, responsibilities, and impacts to agency financial management and operations. However, being well prepared could make the difference between a successful or a failed implementation of CBDC.

Guidehouse works closely with federal government clients by providing a unique combination of operational focus, business leading practices, and technology advisory support to drive mission success. Its Finance Innovation and Optimization teams deliver innovative, data-driven, and technology-enabled services and solutions to modernize financial operations and provide insights to leadership to proactively mitigate risk and optimize fiscal stewardship in the evolving government arena.

Guidehouse is also home to several industry experts who regularly advise our clients with strategizing and preparing for significant financial management changes, including those related to the digital economy.


This article was co-authored by Andreia Bodale, Ilona Garcia-Kat, and Ross Joyner.

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