This is a common fallacy in the Bitcoin community. The fact is banks could work almost the same with Bitcoin as with the US dollar. Yes, that includes creating more Bitcoin from nothing. Keep in mind: Banks don't actually print more dollar bills, but they do put new "dollars" in circulation. Likewise, Bitcoin banks wouldn't mine Bitcoin into existence, but they would create new "bitcoins." There is nothing to prevent fractional reserve banking.
Also, remember that banks work with cash. There is no built in mechanism to force a borrower to repay a cash loan, but there is a legal structure, which works just as well with Bitcoin.
Also, remember that banks work with cash. There is no built in mechanism to force a borrower to repay a cash loan, but there is a legal structure, which works just as well with Bitcoin.
What do you think about the weaknesses of fractional reserve lending? (https://www.youtube.com/watch?v=1HYSMxu-Dns)
I think these comments are interesting: http://www.quora.com/How-does-bitcoin-and-the-information-technology-that-makes-it-possible-have-implications-for-our-world-as-a-global-society