[robgering]

Banks want to quantify their risk as exactly as possible for their asset models. These regulations generally reduce the overall banking system's risk at the cost of compliance. Generally the cost of compliance is far lower than the cost of the hedges against risk.

I'm not convinced that Bitcoin ATMs will be able to get past these restrictions in countries with hyper-complex financial regulatory structures. However, if digital currency succeeds, paper money is sort of a backwards compatibility feature, since the majority will be using their phone (or future unknown digital device) to transfer money independent of a centralized banking network.