Charging interest does not cover any risk, it may disincentivize taking out loans, but ir doesn't change anything with regards to risk. The borrower might still not pay you back neither loan nor interest.

Under a sound money standard - which is the underlying condition for all my reasoning - like gold in the old days, and bitcoin hopefully soon, as I said before, money appreciates in value. So people will work more for the same amount of gold at year T+1, than they had to at year T.

So when you lend N gold at year T, and the borrower spends it, because that's what you do with loans, and then you get back N gold at year T+1, the borrower must have worked, to earn back N gold at year T+1, more than you did to earn N gold at year T.

To pay interest on this loan with the amount of N gold, the borrower will have to work even more than that to pay this interest, that is also in gold. Why should you recquire this extra extra work, measured in gold ?

When you give out a loan, you're not investing in the borrower. You're simply giving money to someone under the condition to give it back sometime in the future. Now you're going to perform your due diligence to see if the borrower is a trustworthy person and all of that, as is your right. But when you seek to make money off of loans by charging interest, you're laying claim to more money than what you're owed, that's going to require even more work which will not be performed by you.

Because the money supply is fixed, there's no reason to charge interest because you're not risking the devaluation of your money when you postpone your consumption of it by lending it to someone and getting it back at a future time.