It is because the Government is allowed to collect taxes in paper currencies that bank inflation exists

If the primary function of money is as a store of value then no aspect of that (function) is denied when a bank claims that such money (exists and) is owed, if they are believed by everyone. If someone with bank deposits feels as rich as someone with cash then this specific requirement of money is satisfied. If the bank is trusted, being owed by the bank is the same as owning the money itself. There is no fear that the bank will not be able to produce the cash when required. In a paper fiat economy if banks have deposit insurance they can inflate the currency and the Government can easily bail them out. With a commodity money it would be more difficult for the State to protect the banks, so it would then be more difficult for the banks to be permitted to loan out deposits. The Government would be more reluctant to defend the banks without being able to tax people in fiat money. If it is forced to tax in a hard currency then a bailout of the banks would be very difficult, as would general taxation. If paper currencies were illegal it would be more difficult for the banks to inflate the money supply because the State would be reluctant to permit expansion of the (owed) money supply, the reason (for the reluctance of the State) being as a consequence of this (bank inflation) the State would then be required to retrieve the hard currency which the electorate would object to. The banks would have placed the State in a difficult situation and likely (they) would have been rejected by the State. The State does not reject the banks because it is easy to accommodate them with the existence of a fiat currency, (if paper currencies are not illegal) there is no reason to make Frb illegal.

To constrain the State with a constitution is useless because whatever the State does is allowed by law. There is no point making it illegal for the State to violate natural rights, it is only a piece of paper, a recommendation. Although, due to the nature of banking, we can recommend that it is better to allow taxation to be collected only in (for the legal tender to only be) hard currencies rather than paper currencies.