Under the central-banking, fiat money system, all money is borrowed into existence. Without fractional reserve lending, the money supply would dry up to nothing as loans were repaid. The problem is the central-banking, fiat system itself.
1. When banks create new money, it is indistinguishable from all other money, rather than being an obligation of the bank that issued it. That means that banks inflate everyone's money supply. (In the days of free banking in the US, bank notes were obligations of the issuing banks to pay the bearer in gold coin.)
2. Government insurance programs like FDIC exacerbate the moral hazard.
Do away with fiat money, central banking, and government insurance of bank accounts, then let banks issue all the paper they want - and caveat emptor to those who accept it in lieu of specie. No laws needed, just a free market.
"Fully half the quotations found on the internet are either mis-attributed, or outright fabrications." - Abraham Lincoln