There's some amount of USD reserves that would make this scheme work. Certainly with $100T it would work. Might it work with only a few billion? Hard to guess. I was surprised how little reserves seemed to be needed to make Tethers work.

The proposal addresses how to discourage consumer withdrawals. But at some point currency traders will get involved and find ways to short the new currency. In the past, traders have created runs on the treasuries of large countries who were propping up their currency.

The key challenge with this system is merchant adoption. Since merchants are forced to charge the same prices in the less valuable currency, they'll drop out if its exchange rate falls by more than their profit margin (and perhaps before then).

This is isn't a system, it's a fantasy. There is a miraculous money well implied here, without which the system can not give basic income. Without the basic income, this is just a more inconvenient form of cryptocurrency.

It would be possible to attract investment into the money well by paying interest, funding the basic income. That interest could then be paid out by inflating the money supply. This is basically a simplified version of the system that is already in place in the US.

I always wondered what would happen if a country using the Euro right now decided to back out and go back to its own currency.

Wouldn't exactly the same thing as the above proposal occur?

ie. Everyone in the country is suddenly paid the new currency, exclusive usage is mandated so by law and taxes require payment in the new currency. There would be fewer Euros needed for internal Fiat so those Euros could be invested and thus the switch should make everyone in those nations that little bit richer right?

I met the founder several years ago to discuss this when he applied to YC, which was experimenting with some sort of voting system that year to get instant access to the accelerator https://news.ycombinator.com/item?id=11459790

Cool that it is still ongoing. I think the way to implement this is with blockchain / crypto considering how easy it is to mint new money. But as another commenter said - the challenge is getting merchants on board.

The key to any good currency (and product) is how to get adoption. I don't think the paper addresses this point, it just assumes merchants will accept greshm like it accepts dollars. I don't think that will be true. If they are dollars, then they have to follow all the financial rules (against ponzi schemes and other types of fraud).

Also, I have my doubts on any currency system that is not connected to real wealth or real value in anyway. I think history has shown that these currencies end in hyperinflation.

Not sure of the point of naming after “bad money drives out the good.” A smirk, perhaps?

Let’s hope merchants don’t buy in, because the cattle don’t know the difference between “basic income” and “basically a Ponzi scheme.”

How would money laundering laws be accommodated? Any system that has a large pool of money in it will eventually attract the interest of the SEC, Treasury, etc.