California will issue IOUs may be issued to anyone owed money by the state with the exception of state workers and other exceptions covered by state law or court order (such as school bond funding). State tax refunds,  Cal-grants for college students, most health and welfare programs, funds to local governments and state vendors can all be “paid” via IOUs.

The IOUs will amount to almost 3 billion a month. It’s now California’s way of printing currency.

Formally called “registered warrants,” the state’s IOUs consist of a piece of paper that says the state owes a payee money, plus interest, to be paid at some point in the future.

The last time California issued registered warrants was in 1992, during two-month budget battle between then-Gov. Pete Wilson and the state’s legislators. But after the state issued almost $4 billion worth of IOUs, many banks stopped accepting them as deposits, claiming the five percent interest didn’t pay for the hassle of processing them. Today they are paying 3.75%.

Since tax refunds came in the form of an IOU earlier this year, people