Re: @Chris Miller
No, fractional reserve means that your reserves are a fraction of your deposits. So for example if the fractional reserve percentage is a typical 6%, you could lend out about 94% of your deposits. The exact reserve percentage depends on the type of deposits you receive and the type of loans you make. The credit multiplier effect comes from people depositing borrowed money back into the banking system, possibly in the same bank.
What this article describes is essentially what Paypal does already. Paypal doesn't lend out money, all of their customer funds are deposited in a bank account, though it isn't necessarily at the Luxembourg Central Bank. They have some advantages for transactions involving small amounts of money, but nobody deposits their entire salary in there, and businesses that receive all their money from customers via Paypal tend to transfer the bulk of it out to a bank account elsewhere.