You don’t have to trust that the process works when you can see that it works by looking at the code and even become a validator/data provider yourself to ensure there’s always at least one honest participant (from your perspective).
There was even uncertainty around the US forming a central bank with some worrying about the power it would have.
Unless it would have been your approach already, not having confidence in L2s because they’re new technology isn’t a reason to dismiss them and decide to let the government manage all of your financial guarantees.
> I don't have to "trust" the banks, I have legal guarantees and transparency mandates enforced by governments
In this scenario, banks = L2 and government = L1.
Are there scenarios where a bank (or other financial institution) can steal/withhold funds from you, or where they can censor your ability to transact with your own money? What is the recourse you have in those situations. What if the L1 itself uses its “right” to take your money through civil forfeiture or eminent domain?
Are there cases where you may not trust the government (or where someone may not trust their government) because it is controlled by a small number of appointed or elected individuals?
In that case, you can compare it to an L1/L2 blockchain setup where the L1 is controlled by a small number of validators (say 1000). That system would be easily corruptible (I can bribe 1k people) and I’d never treat it as a safe settlement system.
Blockchain is all about your choice of who and what to trust.
In the traditional financial system, some people will be fine with fully trusting their government and large financial institutions, whiles others will bury precious metals in the backyard and surround them with land mines. There’s all sorts of middle ground and blockchains let you choose where you want to sit on that spectrum.