Bitcoin don't need a physical location and I don't see any good reason for them to do this, but the government is very good at one thing though, that's taking advantage of the public's fund, if they are creating a Bitcoin bank then it is for no other reasons than what they have been doing before.
Who would dare use banks for Bitcoin reasons? Anyone here? Because it can never be me, a physical Bitcoin bank breaks all the reason why Bitcoin existed in the first place, peer to peer, decentralisation, etc. You must be dumb for such thing to confuse you enough and trust your Bitcoin with the banks.
emm yeah a physical Bitcoin bank here might seem counterintuitive to Bitcoins decentralized nature. however that is not entirely true when you consider the case of El Salvador, mare. AFAIK the proposed Bitcoin bank in El Salvador is not about holding users private keys nor replacing personal wallet or regulate ordinary peopel. Rather the bank is specially designed for institutional investor, they offering services such as deposits, payments & lending denominated in Bitcoin. With a little knowledge, you will realize that the goal of this initiative is to attract only foreign investment & establish El Salvador as a crypto hub, especially for high net worth individuals & institution, i dont see anything wrong with that.