The first problem with banks is their custodial nature, and with that, the risk of rehypothecation inherent to fractional reserve banking. If banks were simply means of warehousing cash for their clients, using them would only imply counterparty risk.
Put simply, traditional financial institutions must adhere to national and local regulations that place restrictions on how individuals can use their hard-earned currency. This problem is exacerbated in countries with strict capital controls.
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