What will happen when every bank or government creates theirs own cryptocurrency?
Again they depend on their fiats absolutely, the only advantage they can enjoy may be easy transmitting within their country.
But the purpose of bitcoin is not that one. Bitcoin will solve many financial crisis. So, it's meaningless when a bank or Government creates their own digital money. It's only meaningful when everybody accepts a digital money world wide. That digital money is bitcoin.
There are many people who still dont know about bitcoin, so I guess bank will take this advantage to announce them that the bank has made a revolutionary currency for them. Since those people are trusting bank, and always hear bad news about bitcoin, there is a possibility for bank to get success from its cryptocurrency.