[dmm]

Just being pedantic here :)

Banks are fractional reserve because at any given time they don't have enough cash to pay demand deposits but that's because they've lent that money out. So while banks don't have cash they do have _assets_ that could be sold or borrowed against to fulfill deposits.

If I have an uninsured, full reserve bank and somebody steals half the deposits I don't become fractional reserve, I become _insolvent_. Just like a fractional reserve bank whose assets drop significantly in value is insolvent.

[droffel]

Thanks for the pedantry, I just updated my comment to indicate that they were insolvent. I definitely used the wrong word there.