Fractional reserve is sort of a misappropriated term as applied to bitcoin exchanges. Such exchanges aren't making loans, so where would the money be going? There's no good reason for them not to have 100% of the funds in reserve.
This proposal doesn't prevent loans and fractional reserve or whatever schemes people may want. What it does is makes it much harder to fail to disclose the truth of the matter.
What kinds of terms people choose to transact under is their own business— but all the better when we can be more confident those terms are being followed.
