It's not wrong, it's incomplete since Basel regulation was introduced. (Although the Keynsian description you will still find in most textbooks is wrong, but th

It's not wrong, it's incomplete since Basel regulation was introduced. (Although the Keynsian description you will still find in most textbooks is wrong, but that's another rabbit hole). The two issue's with non-zero reserve regulation were (historically) the price of gold was implicitly linked to deposit expansion, and in the Bretton Woods era, all the countries had different expansion rates. Then post Bretton Woods, Basel comes in. With Basel the Bank's risk weighted capital also regulates the amount of lending, and hence deposit expansion.