California IOUs

The largest banks in California including Well Fargo and Bank of America have accepted the IOUs in the past. Now, some banks have said they will stop accepting the IOUs at the end of the week.

From this, a market is arising for California IOUs. If you look on Craigslist in San Francisco, there are dozens of ads for "IOUs Wanted."

This raises a few issues

1. Is this a state-issued currency? It is used just like a currency, except that there is an explicit interest bearing feature. If it is a currency, that runs into constitutional issues.

No state shall enter into any treaty, alliance, or confederation; grant letters of marque and reprisal; coin money; emit bills of credit; make anything but gold and silver coin a tender in payment of debts; pass any bill of attainder, ex post facto law, or law impairing the obligation of contracts, or grant any title of nobility.

2. What are they worth if the state does go bankrupt? I have some idea about what happens with a corporation goes bankrupt, but I don't know much about the equivalent for a State.

3. Banks are accepting the IOUs and some may continue to accept them after this week. How do they impact the bank's capital and what does the US Treasury have to say about it?