During the First World War this was because the value of the official coinage exceeded its face value, so coins were hoarded or sold for their metal, and then from about 1923 the rate of hyperinflation meant that the central bank could not print and distribute the ever-higher banknote values quickly enough, so this was done locally.
During World War I, excessive coin value led to hoarding and selling them for their metal worth.  Hyperinflation from about 1923 made it impossible for the central bank to keep up with printing new banknotes fast enough, so local distribution became necessary.