Fractional reserve banking means that for fiat money which you borrow against your BTC, the bank can create a multiple more in fiat money

In other words, the demand you create for fiat money through borrowing from the bank, results in more fiat money being created in the system by the bank, and not on a 1:1 basis, but much more than that.

That is also "printed" money because it costs the bank almost nothing to do that, and it results in inflation.

You get a loan you can pay back with interest, and the bank gets to create money out of thin air.

If your aim is to arrive at a sound monetary system, then this is mildly contraproductive, especially if every transaction conducted in fiat is a transaction not conducted in bitcoins.