good question, you can find answers if you study Keynesian economy and Austrian economy. And also some use of them in last 100 years history of some countries.
To answer your question shortly, it can work with both types of money. Because it's all about redistribution of country's income. You can either do that with inflationary money or you can impose progressive tax rates with higher rates than those today. Or you can combine both of these approaches. Taxation is not very popular because government takes money right from you packet, so last decades consensus is to do inflation of money and sell the idea of low low tax rates - this is mainly thanks to globalization - lure foreign capital to your country and keep your domestic to stay. But we have come to the edge.
If you wanna study about high tax rate economy, take a look at FDR policy up to Reagan 1980 . Reagan won election on criticism of Jimmy Carter that he made too huge budget deficit. Then after Reagan won, he lowered tax rates sharply and made deficit triple size. Situation was saved with credit cards, decrease of median income for average Joe and then household loans.
If you wanna study about best working inflation economy, I suggest former Yugoslavia under Joseph Tito, 30 years of prosperity for whole Yugo society.
If you wanna look at worst inflation economy, take a look at Zimbabwe :)
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Interest rates were high during Reagan, to fight inflation that started during Nixon? I will look at economy of Yugoslavia. Thanks.
it seems the highest rates were during Jimmy Carter, 20%, right before Reagan. In 70's FED has learned(?) that businesses manage prices according to inflation expectation, not on actual inflation. So that FED should not move interest rates up and down like crazy.
fed rates chart
People don't like inflation as much as high tax rates. But if the goal is working economy, we have to choose some way. In 50's Average US Joe could easily pay house mortgage in 10 years, support his wife at home with 4 kids. Same as Yugo Avg. Joe could buy the same house and after 10 years repay the debt with one baked piggy. Both ways provided money velocity needed for economy to work, not sitting in bitcoin or gold or stocks.
https://fred.stlouisfed.org/series/M2V
It seems we've wandered into the meaning of money. Which type of money, inflationary or deflationary, would more satisfy the requirements of UBI. Maybe we should have started off with the requirements?
While most people see inflation as evil and not income redistribution, then deflationary currency is better. But government have to collect taxes from those making profit (earnings after investments) to provide UBI. This is much more expensive than just print new currency. But how can you suppress the greed of people and make them understand the function of inflation to redistribute income? Difficult task. So deflationary + impose high tax rates in progressive rate is likely more acceptable for majority.
If you would be in China, you could try both approaches in 2 districts per 5 million people and wait 'n see.