Thus, by the time banking services became the norm for the general public—and the crises caused by fractional reserve banking began to seriously worry them—the essence of fractional reserve practice was already quite reliably hidden. This was accomplished above all through the confusion between credit and deposit operations that arose during the era when interest on loans was prohibited.
Over time, this confusion only deepened. Note that banks now pay interest (!) on deposits, while your loans to the bank are somehow called “time deposits.” Of course, anyone familiar with economic and legal principles can easily point out the difference between these transactions—but the general public typically knows nothing of such principles. The failure to distinguish deposit from credit operations is one of the main causes of popular misconceptions about the modern financial system.