Okay so if only the banks will be issuing these paper certificates, what denominations will these be issued in? Like $100, $500, $1000? And do you suggest these certificates be used only for securing loans and paying of debts or will there be other usage for them?
Naturally, that would largely depend on the current exchange rate and how much you could potentially buy with the lowest denomination. Usually, governments issue change with the lowest coin being able to buy a matchbox (or something to that tune). So you could estimate the lowest denomination of bitnotes required for making purchases. Obviously, there should be a bitnote of 1 bitcoin. Whether it would be worth to have higher denominations is questionable but once there was a $100,000 banknote...
Which was in fact a gold certificate used only by the Federal Reserve Banks (i.e. it was not circulated)
Regarding their usage, they could be used like any paper money, i.e. for buying things and paying for services