A fractional-reserve BitBank will only be noticeably inflationary if it can take a substantial amount in deposits, then find some people to borrow them. Since

A fractional-reserve BitBank will only be noticeably inflationary if it can take a substantial amount in deposits, then find some people to borrow them. Since most of the "convenience" arguments for keeping traditional currencies in a bank rather than under your mattress don't seem to apply here, the only reason anyone's going to make a deposit is if the interest on offer appears to justify the risk. Without the backing of a government deposit insurance scheme, I reckon that translates to both a high interest rate AND probably some degree of transparency to convince depositors it's not a complete scam. Could be an interesting project, but hard to see it causing a major shift in BTC values.