Initially, when banks were the dominant financial institutions, the major purpose was to reduce “systemic risk” and the impact on the economy of bank failure. Then as the safety net was  BIS Review 76/1998  -2-  created to reduce systemic risk, the resultant moral hazard created an even more important reason to supervise and regulate banks.
Historically, the objective was to protect against a panic-driven flight to currency, or bank runs, that caused a catastrophic decrease in the money supply and the collapse of financial intermediation. Today, largely because of deposit insurance and the Federal Reserve discount window, flights to currency are not a real concern in the United States.