In my book, that means the system can cover its debts. As it turns out, almost all bank reserves are kept as vault cash , i.e., currency. Assume they could pull that out overnight in green paper money. That tells you how many dollars the whole banking system can and will create from one new dollar deposited. That number is 108.74.
Leverage also works backwards.
The next time somebody quacks at you about how sound the banking system is, show him these figures. Ask him if he would lend to a friend with assets and liabilities like that. The fragility and vulnerability of this system is clear to anyone. It s not that this fragility has just emerged, but that it has always been there. It is the nature of the system, a fractional reserve.