Limited Identity, Not Anonymity for CBDCs

Maybe our goal in CBDC transactions should not be anonymity but limited identity. Let me explain.

I have been reading, "Identity is the New Money," by David Birch. He argues that transactions are really based on establishing credit. If this can be established, then cash is not needed. In a credit card transaction, all that is being verified is that the card holder has a line of credit. You are identified as having credit. No other information about you is necessary.

He goes on to point out that there are few daily occasions when we have to reveal our full identity. We only need to prove that we are entitled to do something: buy on credit, drink alcohol, etc. All that a counterparty needs to know is that we have a credit line, over age, etc.

So, in a CBDC transaction, why should we have to prove more than we have a valid CBDC account? This is kind of the approach being taken with the Project Hamilton model being developed by the Fed with MIT, which requires only limited information. And, in a two-tiered CBDC model, an issuing bank would do the KYC and issue us with a limited identity. In either case, any transaction would only demand that it be confirmed that we have an account with adequate funds. No other information needs to be revealed (without a court order anyway).