When you operate a fractional reserve, other people/businesses owe you at least as much money as you owe to your deposit accountholders.
When you're insolvent, you can't cover your obligations. Even if you called in every loan you'd made, it still wouldn't give you enough cash that all your deposit account customers could withdraw all their money.
Calling Mt. Gox a "fractional reserve" is giving them way too much credit.
When you're insolvent, you can't cover your obligations. Even if you called in every loan you'd made, it still wouldn't give you enough cash that all your deposit account customers could withdraw all their money.
Calling Mt. Gox a "fractional reserve" is giving them way too much credit.