It's not done manually
And that's the whole thing about fiat currencies and why they are so interesting. They are unique in their capacity to automatically readjust the money supply as required by the economy via creating as well as destroying what has become known as endogenous money. And while we are at it, you can't match this supply manually anyway as it is simply impossible technically. The central bank changes interest rates, that's true indeed, but it is only to oversee and maintain this self-regulating mechanism
But it is. Endogenous money is not created automatically; it is created by banks at their sole discretion. It is not destroyed that way either; it happens only when the loan is repaid, which depends on the will of the borrower. Banks are known to blow bubbles and borrowers are known to become insolvent
You put forward contradicting claims
First, you say that "endogenous money is ... created by banks at their sole discretion" (which, in my view, pretty well counts for automatic money creation, just in case). Then you assert that it is destroyed "only when the loan is repaid". I guess you can't have money created by banks at will (read, arbitrarily), while at the same time destroyed only when
the loan is repaid (emphasis added). As you hint at, banks can create money only when a loan is taken (whether it is subprime or otherwise is a different matter). Exhaustively simple logic, isn't it?
Without a regulating authority, a fractional reserve system is unsustainable. Banks will inevitably blow a bubble, which will burst, result in a bank run and a total collapse. This actually happened systematically in 19th-20th centuries and led to the emergence of CBs. Could we survive the 2008 crisis without the Fed’s QE program? Unlikely
And how this disproves my point that CB's are there to maintain the health of such a system?