As an emergency precaution, the US Bureau of Engraving and Printing should print several series of very high denomination currency. Literally $100,000 to $10,000,000 bills. Keep them in reserve.
These bills would solely be for the US of financial institutions, major corporations, and the Department of the Treasury. They must be printed in quantities so that they are in a 1:1 ratio with our economy, with possession and transfer only permitted with government approval.
That is, for the first time since the gold standard, US currency would be backed by paper. And there are very important reasons for doing this.
To start with, if there is a major credit collapse, there will likely be catastrophic deflation, unless there is substantial cash in the marketplace.
Second, *only* paper money, *not* virtual money on computers, would be backed by the full faith and credit of the US government. A paper bill would be redeemable whereas leveraged money, in a credit collapse, may not be. Even if billions of dollars of virtual money was wiped out, whoever had bills would be protected.
Authorized possession of a bill would guarantee collateral *to that amount*, again after government approval, but a paper bill would be “yours”. It could not be taken away from you except as ordered by the government. And thus it will protect vital industries menaced by gigantic outstanding levered debt—they would still have credit from authorized creditors.
Finally, it would prevent the massive drain of lower denomination paper currency from the market. For while there would be terrible deflation of ordinary currency, at least there would be no big corporations stripping cash from the economy at the same time.
That is, for $1M in low denomination cash, the government could give them a $1M bill, then return the cash to banks for re-distribution to the public, preventing a collapse of the retail market.