Banking laws and regulations. In most countries, banks are required to physically hold (i.e. not lend further) as a reserve a fraction of the money in their customers accounts. This is to provide liquidity, protect against bank runs etc.

So, If a customer A has $1000 in his account and the reserve rate is 10%, the bank can only lent $900 to some other person B. Then, in turn only 90% of that can be lent further. If you run this to the limit, for a 10% reserve rate, the amount of money that can be generated by banks is at most 10x the physical amount.