from wiki (http://en.wikipedia.org/wiki/ID-based_encryption)
Identity-based systems allow any party to generate a public key from a known identity value such as an ASCII string. A trusted third party, called the Private Key Generator (PKG), generates the corresponding private keys. To operate, the PKG first publishes a master public key, and retains the corresponding master private key (referred to as master key). Given the master public key, any party can compute a public key corresponding to the identity ID by combining the master public key with the identity value. To obtain a corresponding private key, the party authorized to use the identity ID contacts the PKG, which uses the master private key to generate the private key for identity ID.