The major problem of a currency that is fractionally backed and convertible into a precious metal is that of

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The major problem with a currency that is fractionally backed and convertible into a precious metal is maintaining its convertibility into the metal. If there are not enough reserves of the precious metal to back up the currency, then holders of the currency may begin to doubt its value and demand conversion into the metal, which could lead to a run on the reserves and a collapse of the currency system.

The Major Problem of a Currency That Is Fractionally Backed