It’s worth noting that ‘fractional reserve’ isn’t really how banks work anymore. That model implies that banks require reserves to lend money, but they actually don’t (except in the countries that have a reserve requirement, for compliance reasons). The central bank does need to ensure that enough reserves exist in the system to have enough liquidity for banks to transfer money between them, but the banks tend to hold as little as possible, as in most places they don’t get any return on them, so they lend them to other banks (banks cannot lend reserves to individuals) or exchange them for bonds. If they need more to fulfil transfer requirements, they can just borrow them from other banks or the ‘lender of last resort’ - the central bank itself.
The interesting implication of this is that the central bank doesn’t really have direct control of the size of the money supply (as is implied by the ‘money multiplier’ myth). That is determined endogenously by the amount of lending the banks do (plus other sector’s - Government spending and current account surplus/deficit - contributions).
Yes, I'm a macroeconomist, I dabble in these matters all day every day (actually not really, I run the family company nowadays, but anyway, this stuff is my bread and butter, supposedly)... I know that current western systems are better characterised as being endogenous money systems rather than fractional reserve (though the two are not mutually exclusive, as if the reserve ratio is not mandatory but flexible then banks can be doing fractional reserve while the central bank simultaneously does not have any control over the size of the money supply... which isn't that bizarre either because as one progresses up the hierarchy of money supplies (M0, M1, M2, M3...) one pretty quickly gets far from anything central banks can legiferate about and into the domain of “assets agents are willing to accept as valuable and as suitable for exchange”, such as cigarettes, art, or prime real estate.
I'd argue that the endogenous money model most definitely isn't applicable to any cryptocurrency currently out there because maximum amounts are fixed, and thus (eventually) would be come unresponsive to market needs (and more technically, their derivative, the ‘speed’ with which money is introduced or removed, does not depend on the needs of the underlying economy and instead on technical aspects of the size of the mining network & cetera).
Sorry I didn't answer earlier I didn't see your comment.
The interesting implication of this is that the central bank doesn’t really have direct control of the size of the money supply (as is implied by the ‘money multiplier’ myth). That is determined endogenously by the amount of lending the banks do (plus other sector’s - Government spending and current account surplus/deficit - contributions).
This Bank of England (UK central bank) paper explains how the banks originate money - https://www.bankofengland.co.uk/-/media/boe/files/quarterly-...