Right — however it was always an abstraction. Lose gold at sea? Well just because the bank ignores this event and issues more paper doesn’t mean the ship didn’t sink.
I understand that the concept of reversibility is highly desirable, but that bank can not raise the sunken ship right now. It has to take the loss and not just pretend it didn’t happen. Reversibility is always an illusion. Most things in this universe are actually permanent.