You do realize that if you have your money in bank, exchange or on paypal that you have an IOU for fiat.

The stable currencies on the bitshares block chain are not IOUs from a centralized entity, it is an IOU from the block chain that is backed by more the 2x its value in a liquid collateral and earns interest. If you understand how a bank works than you understand that you can automate the functionality of it on the block chain. That is you can create a collateralized debt instrument that is enforced by the block chain and is not subject to counterparty risk.

We don't want fiat, we just want the price stability of fiat and to not really on opaque financial intermediaries that can lose or seize our money.