There is an equivalence between inflation and debt

If people don't want to get into debt then the fractional reserve banking system will not cause harm. The harm caused by the fractional reserve banking system is reliant on people being willing to get into debt. If people refuse the offer of debt then the system will collapse (or at least there will be no further expansion) and there will be proxy sound banking. The problem with the banking system is the willingness of people to get into debt.