Inflation occurs when there is more money in the system than there is economic growth. A fractional monetary system (where the bank only has to hold a small portion of what it receives as deposits and loans the remainder out, effectively creating money) adds to this situation by geometrically increasing the money supply.
Deflation occurs when the amount of money shrinks in relation to the economic activity.
By restricting the extraction of saved funds, what is happening is the restriction on deflation.