A number of different types of risk are involved – credit risk, interest rate risk, operational risk, etc. The risks involved in these privately based payments media imparted a comparative advantage to currency as a transaction medium, since the latter was the only instrument that could perform a payment and settlement function (with finality) at one and the same time.
And it did so by virtue of its legal tender status. This meant that notes and coin facilitated transactions in anonymous market situations since the seller never had to concern himself/herself with the creditworthiness of the buyer.