Obviously there is nothing technically stopping it, but setting up the rules for a fully distributed fractional reserve system would be non-trivial.  For example, if anyone can create money by lending it, then they can set up 100 wallets and lend money from one to the next to the next, amplifying their debt each time.  Then once you have enough money, you spend it and abandon those wallets.<p>The fractional reserve system works precisely because only a few well known actors are allowed to create money -- which is a bit of antithesis for this kind of crypto currency.<p>However, I have to say that one of the things that bothered me (economically) about bitcoin is the lack of debt.  This limits the availability of currency to either mining (which requires a large investment of hardware) or buying the currency on a market (which requires using a different currency and essentially relying on the same banking industry that you were trying to avoid).  I would be very interested in seeing someone attempt some kind of monetary creation through debt in a cryto-currency.