It is not really true that banks "use your money to do stuff" like make loans. At least the largest banks in the economy like JP Morgan for instance When the largest bank does stuff, like make a new loan, buy a toaster or pay for salaries, the receiptient of the payment probably also has an account at the largest bank. Therefore this act of payment actually increases deposits at the bank. If the recipient (the toaster manufacturer), banks with another smaller bank, that smaller bank may keep an interbank deposit at the larger bank, so again, buying a toaster increases the deposits at the large bank. This "stuff" does not reduce the liquidity at the larger bank The constraint on bank spending is the capital ratio, so how much equity the bank has. In this critical respect, stablecoins and narrow banks are fundamentally different to the existing banking system @matt_levine(BitMEX Research)