Not true. If I deposit 100 bitcoins at a bank, the bank lends out 90, and I want to withdraw my 100 bitcoins, the bank is screwed. Even if they lend out 25, the bank is screwed.
On demand deposits simply cannot be loaned out if a banking system is to ultimately remain stable. Sure, some banks can try to do it, but then they better not call them "on demand deposits". Deposits can be loaned out, but not with a guarantee of redemption. That is simply impossible as Bitcoins cannot be created out of thin air.
Not to pick on Bitcoiner, I've seen this line of reasoning in lots of threads. However, it is bunk as it leaves out obviously everyday solutions currently in use.
Obviously if there is "a run" on a bank's cash reserve, their obviously most common solution is to BORROW cash at interest from another bank. Sometimes this money comes from a central bank, but normally it comes from one of the other banks who are not experiencing "a run" on their cash.
A bank does not "go bankrupt" when it runs out of cash. It goes bankrupt when it runs out of credit worthiness. Banking is always based upon trust in the bankers making the decisions.
Given that I actually agree with you up to that point, how is my line of reasoning bunk? My point still stands. The supply if Bitcoins is limited: The banking system
in aggregate cannot find enough Bitcoins if it loans its on demand deposits out! Why should the depositor accept quasi-bitcoins in the form of banking credit instead of the actual thing? On demand deposits simply cannot be loaned out if a banking system is to ultimately remain stable. Sure, some banks can try to do it, but then they better not call them "on demand deposits". Some might get away with it, but sooner or later, someone will find themselves between a rock and a hard place. Deposits can be loaned out, but not with a guarantee of redemption. That is simply impossible as Bitcoins cannot be created out of thin air.