It isn't really different from normal banking. Banks are allowed to create money by issuing debt, and the loan agreement itself works as the reserve for the issued currency.
In both cases the thing doesn't blow up if the debt is collateralized with something that keeps appreciating against inflation. It can go on forever, but people whose savings are decimated might get angry at some point.
In both cases the thing doesn't blow up if the debt is collateralized with something that keeps appreciating against inflation. It can go on forever, but people whose savings are decimated might get angry at some point.