Bitcoin would not prevent (or disincline) private banks from setting loan interest rates based on LIBOR. You can lend out 100 BTC at LIBOR+5% just as easily as

Bitcoin would not prevent (or disincline) private banks from setting loan interest rates based on LIBOR. You can lend out 100 BTC at LIBOR+5% just as easily as you can with USD, and for all the same reasons. All bitcoin does is remove all control over creation of hard currency (not money in general - just M0, hard currency) - for better or for worse.