I think you need to read more about bitcoin. First, having a centralized bitcoin bank defeats the purpose of a peer-to-peer system entirely. Your identity is no longer anonymous.
Second, providing interest to those that hold their bit coins in this bank must provide some facility for the bank to be able to give out bit-coins they didn't previously have (fractional reserve banking). Due to the mining nature of bit-coins which is not regulated by the fed but limited to an absolute supply, interest can not always be guaranteed to the holders, and there would be a run on the accounts to pull out.
What you've described is the system we have- BitCoin is an experiment on something different.
I'm well aware of how bitcoin works, and for starters bitcoin isn't completely anonymous. It's semi-anonymous. Secondly, a bank doesn't have to practice fractional reserve banking, they can practice Full-reserve banking. In this case the deposit to the bank is really a loan to the bank, with the bank promising an interest rate on the loan. On your point of interest rate, interest rate can't be truly guaranteed in any system, and a run is prevented in a full-reserve banking system, because it's not a deposit it's a loan.
Now, I'm not saying anyone should actually try to do these things. In fact I agree that Krugman is missing the whole point of bitcoins to the point where he doesn't even bring up it's semi-anonymous nature. I simply wanted to counter his argument that commodity currency wouldn't allow the economy to grow, but as I said earlier bitcoin isn't a regular commodity. It is a currency whithout intrinsic value.
??? A bank makes money by taking deposits (giving interest) and then lending them out (collecting a higher interest). The reserve percentage is that amount that remains unlent.
Full reserve = no loans = no profits = no bank.
Edit: Yes, you can practice full-reserve with a negative interest rate, which is effectively a safe-deposit box does (they charge a fee for the box).
A negative interest rate actually makes sense in the presence of deflation, and if bitcoins turn into a serious currency, deflation is pretty much guaranteed.
Bitcoin is not designed to be anonymous. From bitcoin.org: "While the Bitcoin technology can support strong anonymity, the current implementation is usually not very anonymous."
Second, providing interest to those that hold their bit coins in this bank must provide some facility for the bank to be able to give out bit-coins they didn't previously have (fractional reserve banking). Due to the mining nature of bit-coins which is not regulated by the fed but limited to an absolute supply, interest can not always be guaranteed to the holders, and there would be a run on the accounts to pull out.
What you've described is the system we have- BitCoin is an experiment on something different.