A properly defined central bank can compete against the shadow banker

Is Inflation Targeting the Best We Can Do?

But we cannot get to that point until our economists understand pure shadow banking. 

The Fed taxes us, arbitrarily as the government needs money.  The central banks need to expose the central bank tax to the market, so that extra tax does not cause cycles.  This is a 500 year old problem. It was solved a few years ago, finally, but central bankers are institutionally stuck, they cannot learn.