The primary purpose of a bank is to issue debt. That’s why they were created. A bank has to be able to “print” money to issue debt. This isn’t a flaw as some crypto fans like to think, it’s a very important feature. Debt issued by banks replaced the informal promise-based debt people used before we had banks. You didn’t need money on hand, or to borrow some coins from some rich dude, to get help building a barn. You got help from people in the village in exchange for some other goods or service you’d provide them in the future. Bank issued debt with “printed” money is the replacement to that, and it only works if money can be created on demand.
Crypto can’t “print” money on demand, by design. So it can’t replace banks.
Yes
> A bank has to be able to “print” money to issue debt
Absolutely not, especially not in the context which you just said ("that's why they were created"). When the banking industry started in various Italian city states, money was state issued and backed by precious metals, and banks didn't create any new money supply. They gave loans, invested, kept deposits, etc. but without touching the money supply, which was managed by sovereigns and sovereign states.
- Alice deposits $100 into the bank. The bank owes Alice $100.
- Bob wants a loan. The bank offers him a loan of $50, backed by the $100 from Alice. The bank owes Alice $100. Bob owes the bank $50.
- Bob withdraws the $50 to spend on coke and hookers. The bank uses $50 of the money deposited by Alice to give to Bob. Bob has $50. Alice still has $100 balance.
The bank has just created $50. Everyone is happy unless Alice (and everyone else) wants to withdraw their money and they aren't able to get it back from Bob. That's a bank run.
So in your example, the bank can lend $1000 to Bob, backed by Alice's $100.