I've had this idea going through my head for a while now, and I can't find any evidence that it's been considered in academia or policy circles. Maybe that's because it's already been discredited, but I'd like to hear people's opinion of it.
Could UBI be paid in a parallel currency, tied to the value of GBP?
This currency can not be exchanged for fiat currency or spent abroad, and expires within a certain time frame (e.g. two months). This would mean that any money paid out would be continually recycled within the domestic (public or private) economy as there would be no incentive to hoard the currency and it wouldn't leak outside the UK.
Businesses could apply for the right to accept the currency if they can prove that they are a British owned SME (to prevent the currency simply being used to subsidise costs before sending their cash profits to shareholders), adhere to acceptable labour and environmental regulations, etc. They, in turn, can use the currency to pay wages, buy goods and services from other approved businesses, or pay for utilities etc.
£1000/month given to every 16+ year-old would be approx 55m×1000=55bn. Even though the payments to the individual would recur monthly, there would only a one-off payment by government because the money would circulate perpetually. Payments could also count towards an individual's tax allowance, so some of the value would be returned to the government through tax receipts.
Could this be a way of boosting the domestic economy and putting money into people's pockets without the inflationary implications of printing more money?
The only problem I can see with implementing this scheme would be businesses withdrawing if they over-accumulated the currency. What would be their incentive to accept a currency that they can't turn into money? Could there be some sort of tax break here, justified by a desire for government to boost local busineses and an incentive for the good practice that is prerequisite for membership of the scheme?
I'm not an economist so I'd love to hear whether I've got the wrong end of the stick!