Of course it's possible, and the transparent ledger wouldn't help you estimate the value of the bitcoin-credit the bank has loaned out. MtGox operated as a fra

Of course it's possible, and the transparent ledger wouldn't help you estimate the value of the bitcoin-credit the bank has loaned out. MtGox operated as a fractional reserve for a while, and it failed due to two reasons: - Instead of investing the bitcoins to debtors they "lost" them. - The complete lack of deposit insurance ensured that a bank run happened as soon as doubts of their liquidity circulated. If you manage to fix these two problems (the second being the harder one - you'd have to work with different exchanges/banks and make sure they are regulated so they don't all fail) fraction lending isn't a problem.