Ideally, not only institutions, asset types, and currencies should be diversified but also national jurisdictions. People in many countries have found themselves frozen in place and/or looted when their governments impose capital controls, devalue their currency, or seize asset classes.
In Britain, severe exchange controls were imposed at the outbreak of war in 1939 and remained in effect until Margaret Thatcher’s government abolished them in 1979, forty years later. British citizens were severely limited in how much money they could take out of the country (£50 in 1966) and were not free to invest in foreign shares or property without special approval. Those who were wise enough to park some of their assets outside Blighty before 1939 were not affected.
In 1933, the U.S. seized all privately-owned gold in country, paying US$ 20.67 per troy ounce for gold surrendered. It then devalued the dollar to against gold (and all gold-linked foreign currencies) to US$ 35 per troy ounce, picking the pockets of its citizens by 40%. These restrictions remained in effect until 1975.
In fact, it’s generally a bad idea to keep substantial assets in the country in which you live, since that puts them at the fingertips of a government which can seize them and directly sanction you. This is sometimes coarsely put “Don’t keep your ass and your assets in the same place.”
This diversification is part of the complete “five flags strategy” developed by Harry Schultz and Bill Hill for those who wish to preserve as much freedom and autonomy as possible in an increasingly coercive world.