An unusual property of this mechanism of creating a stablecoin is that the bank no longer holds the funds that back the stablecoin. There's no possibility of the bank locking up the funds of a company that issued a stablecoin.

It's the burn and mint used in Luna Classic, now in physical form.

I understand the conversion from dollars to coin. What about coin to dollars? There’s a floor but no ceiling, so I don’t see how this is a real peg.