If the Jews were such a hated minority, then why did European governments give them the ability to essentially monopolize all of business in the Western world?
There's a lot of poor assumptions in these two short sentences.
First, the wealthy traders and other successful businessmen were overwhelmingly Christian. Jews did not "monopolize all of the business in the Western world", or even a lot of it.
Second, the Jews were not the only people in medieval Europe allowed to charge interest. Everyone could charge interest, it just couldn't be usurious interest - a rather important distinction. Even so, there were just about as many loopholes as you might expect.
Third, the Jews were not a particularly hated minority before the fourteenth century or so.
Fourth, why Jews were well-known for interest deals: as perpetual outsiders, they were usually never allowed to own property, and therefore kept most of their assets in coin. This made them convenient and natural moneylenders. Though Christians were canonically forbidden to lend to other Christians at usurious interest rates (spoilers: they still did), and Jews similarly did not lend to other Jews at usurious rates, there was no such prohibition on Jews and Christians making such deals between each other. Moreover, a significant portion of the sort of "Merchant of Venice" type tales are simple later propaganda.
The Old Testament forbade Israelites to charge interest to each other, but allowed them to do so to non-Israelites.
Do not charge a fellow Israelite interest, whether on money or food or anything else that may earn interest. You may charge a foreigner interest, but not a fellow Israelite, so that the Lord your God may bless you in everything you put your hand to in the land you are entering to possess. Deuteronomy 23:19-20
The medieval Christian Church interpreted this to mean that, similarly, no Christian could charge interest upon a loan to a fellow Christian. Lending money without interest was perfectly fine. Still, of course, this put a great roadblock in the way of financial development. However, there was one exception: neither the Jewish rabbis nor the Christian Church cared about loans between Jews and Christians. So, the Jews - driven out of farming and the trades by increasingly-discriminatory legislation - turned en masse to this opening.
This did not make the Jews popular, of course. Kings who were themselves deeply in debt to the well-established Jewish banking families periodically confiscated all debts owed to Jews. The stereotype of the money-grubbing Jewish banker, still popular in anti-Semitic circles, dates from this era. What finally ended their monopoly was Christian merchant families discovering loopholes, such as investing in businesses or demanding repayment in another currency, in the Church's prohibition on interest.