Fractional reserve on it's face isn't terrible when you know the bank you're using is doing it and accept the terms and risk. The issue is when the money itself is completely debt.

With free banking, you can choose your own level of risk. With Bitcoin as the underlying and proof of reserves being possible, you can better assess the risk of any given bitcoin banks ecash. Lightning itself is full reserve by design. Ecash requires trust, but the nature of there being multiple interoperable mints provides some level of check.