In this version of the world, who would lend money for houses or cars? Why would they give you tens to hundreds of thousands of dollars to be tied up for years to decades, when in the end all they're getting back is the money they had in the first place. Would the government manage that instead of the banks? I'm guessing not... I hate interest as much as the next person, but As long as we live in capitalism, people will do things to make money, and one way is to loan your money and get interest in return for fronting the entire cost of something. Otherwise, no one and no entity would just give away their money for no gain whatsoever. It you don't like that, then that's a problem with capitalism. Cuz even if banks didn't exist, then you'd just have rich people loan out money for interest and make their money work. But then they'd spin up a business to manage such things, and you're essentially right back to having banks.