They are wrong. This was not about fractional vs full server banking. They are also wrong about what how fractional reserve banking works. The Swiss initiative (that I voted on an rejected) was only that the central bank would have to full control, it did not force 100% reserve banking.

Woods and Murphy follow the Rothbardian school and that is a minority even among Austrian Economists. If you want to see a more modern Austrian-Chicago critic on that, I would recommend George Selgin.