Why, because bills have serial numbers? Presuming that ecash "units" will also have serial numbers, that would mean getting caught with a flagged unit in your possession could land you in hot water (just like getting caught with marked bills). But without a public ledger, ecash still wouldn't be amenable to forensic accounting in the way bitcoin has proven itself to be.
fungibility is a binary quality where one thing is indistinguishable from another. Sites like whereisgeorge.com use this feature of non-fungibility, as an example, to show where the money has been.
By virtue of this non-fungible quality, not all dollars are equal. Imagine you are a business owner, and someone pays with cash, and part of those bills are marked, or observed, as part of a criminal act like bank robbery or drug buy, you name it. As the business owner, that money can and will be seized and your operations will be complicated as a result of something outside of your control.
In a perfect world, you just show how you got the money and there is no problem, but what if you couldn't? What if you as the business owner have paid your rent with this cash, and your landlord is the one who is targeted for questioning, and deciding to avoid the hassle or speculation they just decide to terminate your lease agreement?
Fungibility means every dollar is indistinguishable (in value) from the rest, and for this reason, cash is not fungible.
What would you propose qualifies as a private instrument given this definition? Anything with a public ledger lends itself to really detailed forensic accounting, and durable goods tend to be uniquely identifiable. Gold can be melted and reforged, but it could be chemically altered so that it would remain traceable.
