In a speech at the Buttonwood Gathering in New York City Mervin King made the following remark :
Another avenue of reform is some form of functional separation. The Volcker Rule is one example.
Another, more fundamental, example would be to divorce the payment system from risky lending activity –that is to prevent fractional reserve banking (for example, as proposed by Fisher, 1936,
Friedman, 1960, Tobin, 1987 and more recently by Kay, 2009).
In essence these proposals recognise that if banks undertake risky activities then it is highly dangerous to allow such “gambling” to take place on the same balance sheet as is used to support the payments system, and other crucial parts of the financial infrastructure. And eliminating fractional reserve banking explicitly recognises that the pretence that risk-free deposits can be supported by risky assets is alchemy.
The short answer is probably, but this kind of radical reform is only possible after the system has collapsed.