Dollars aren't an IOU. Their advantage is all creditors and the government itself is required to accept it as payment, and practically speaking, all businesses will also accept it even though they aren't legally required to. But owning them doesn't mean the government owes you anything.
The advantage of an actual IOU is revenue and expense streams, even when they are very predictable, may not happen on the same schedule, or one is seasonal but the other is not. So allowing the buyer of a good or service to pay with money they don't yet have (and allowing the receiver to count that as revenue according to accrual GAAP) is critical to how businesses function.
Not forcing them to trust each other is the only thing that makes this possible, and that happens via banks and other market makers. This arguably even requires some level of centralization because many factors make this easy for a bank but pretty difficult if not impossible for some arbitrary third party, i.e. banks are extremely well capitalized, heavily regulated and audited, might have multi-century histories of reliably making good on their guarantees, have extremely specialized departments dedicated to assessing default risk. Paying for this reliability and trustworthiness has been deemed a worthwhile cost of business for effectively as long as businesses have existed.
Making this actually free would be nice, but I don't see how it's possible. Settle doesn't seem to solve that from reading this. It just trades explicit cost for risk, which you can already do if you prefer risk. Cryptocurrencies don't solve it either. Something like lightning is fine for microtransactions, but anything large enough that you would otherwise involve a bank or escrow agency can only be handled by the blockchain itself with its massive transaction costs, which happen to be presently masked from buyers and sellers due to the ability of miners to get rich off of speculative frenzy, but when that stops being the case, suddenly you're going to need to pay explicitly to move large amounts of value, more than you would have been paying a bank.
