also I hope by 'highly implausible scenario' you mean 'how it actually works'
It gets a whole lot more complicated (and more money from nothing) when you consider that the person receiving the money gets involved.
we may not have the same bank, but all banks work on the same principle, and the money loaned out by bank A to person A will eventually make its way into another bank, who will loan out the money again.
so, if I take a $100 and put it in my account, not only will the bank loan $90 to one of it's own customers, the $90 (which the bank will immediately loan $81 out against and whatnot) loan that was created will get put into another persons account, so the $90 deposit will get another $81 loaned out against it. This makes two loans for every actual loan made, increasing that amount to about $2000 off a single $100 deposit.
they are making this currency out of thin air- it did not exist in the first place for them to actually loan out, it's paid out of the banks reserves if someone decides to turn it into cash. This is an incredibly rare scenario though- the money borrowed is always for something, so will make it's way back into the system without ever actually having existed. As the made up loans get paid back, the bank continues to loan out more and more money as the new AR payments allow them to do so based on the fractional reserve system, at a rate of about 20:1, despite them "having to have a 10% reserve fund."