I believe there is still a tax on private bank notes along with some federal regulations that make it extremely unattractive for banks to issue their own curren

I believe there is still a tax on private bank notes along with some federal regulations that make it extremely unattractive for banks to issue their own currency. State governments are prohibited by the constitution from issuing their own currency. Otherwise private entities are free to issue whatever currency they like. Nothing requires it to be pegged to the US dollar as far as I'm aware. You're effectively trading the "full faith and credit" of the US government for some pretty paper. Whether that pretty paper is worth something depends on whether you believe you will be able to purchase things of value with it, or in this case because banks guarantee a fixed exchange rate with the dollar.