If you want to get money out of the economy, this is the opportunity to tax negative externalities, the very things you want to have less of. But the central planners instead reach for the wrong tool: raising interest rates. They should be flexing their fiscal policy muscle. It should be a tax bonanza on fossil fuels, plastic pollution, overfishing and much much more! You can solve actual environmental issues this way!
Well, when people default on their loans and can't refinance them, they'll default and that money will disappear from the economy. That's on the bank underwriters, and that's when their balance sheets deserve to go lopsided. Not because of central planners raising interest rates.
I far, far prefer a UBI to the Banking System for putting money in people's hands. An underwriter at a bank guesses whether a business will be able to repay a loan with interest over 10 years. A consumer knows whether they want to buy something today with their UBI money. I'd prefer the money enter the system via consumer choices, not underwriters at banks.
People often ask "how can we afford UBI". They don't understand how money is issued and destroyed. The banks currently issue the money with zero reserve requirements, and it's only destroyed when people can't afford to pay the loans. We could equally just ask "how can we afford the banking system?" We can afford either system, it's just a question of who gets the actual money, and I'd rather consumers make that decision. Because then it goes towards things people actually need, as opposed to making fatcats richer.