Loans and Mortgages predate fractional reserve banking and loans in fact predate institutional banking. They are in fact created by lending out capital to othe

Loans and Mortgages predate fractional reserve banking and loans in fact predate institutional banking. They are in fact created by lending out capital to other people. In institutional banks this capital was initially depositors money. The whole concept of bank runs initially existed because if people lose faith in a bank too many of the deposits are lent out to provide the money to everyone who tries to withdraw. Fractional reserve banking comes with the printing of the certificates out of air, but generally from paper money that existed and was controlled by a government acting through an entity like a central bank.