It will fail for the same reason other attempts to stabilize currency values always fail. The first time there's a crisis, the regulator will have to decide whether to permit the crisis or prevent the crisis. If they permit the crisis, people will realize that the promised 'guarantees' are shams. If they try to prevent the crisis, they will run their reserves down to nothing, and the same thing will happen as if they permitted the crisis except they'll be broke.
If you make one small change though, I don't see any major technical flaws. Simply accept that the regulation will be maintained only under normal conditions and that crises may push the ratios out of bounds. The regulator should have a policy for how it detects a crisis, what it does during them, and how and to what extent it compensates people harmed by them afterwards, if at all.
For example, before banks were Federally insured, they would have a policy that the board of directors of the bank could declare a "crisis", suspend withdrawals, but later compensate people with extra interest.