Ok this article isn't great, I'll give you all that. But the idea isn't awful. Hear me out.
What he is essentially calling for are two things:
- a kind of insurance fund for exchanges, where each exchange voluntarily participates, and membership implies a certain trustworthiness. If you don't live up to expectations you are sanctioned. Fine.
- a voluntary "fractional reserve" system, where you can either have your exchange account 100% backed, or some portion of that (his suggestion 80%), then exchanges could also become bitcoin lending institutions, with your approval.

These would be voluntary systems.

What he's not proposing, is a system of "bitcoin printing" or QE or any such nonsense.
Leaving some of his pro-state intervention rhetoric aside, it's not a bad idea.