[dmm]

Full reserve banks are possible. You just have to maturity match everything, meaning every loan of term t has a matching deposit with a maturity of t. Deposits in demand accounts could not be lended.

I have no idea whether this is a good idea or if it would work as a business.

[fennecfoxen]

That's sort of the idea behind securitized mortgages, except once the bank makes the loan the bank leaves the picture (except perhaps as a custodian responsible for payment collection sometimes.) This is one reason securitization of mortgages led to lower interest rates and was generally considered a good thing for a while.

In the alternative scenario, economists describe loaning from demand deposits (at a higher interest rate) with a phrase like "the bank is selling liquidity".

[jeremyjh]

The retail markets have voted overwhelmingly for interest bearing demand deposit accounts. I'm not sure if a fee-based DDA is available anywhere but it certainly is not popular in the US where we get "free" deposit insurance.