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 prime, subprime, or otherwise is a different matter). Exhaustively simple logic, isn't it?
I see no contradiction there. Despite there are preconditions for a loan to be issued (namely, sufficient reserves and a request from a borrower), a decision to create money (issue a loan) is made at will. There is no automatic trigger that dispenses money to the borrower’s account. The bank may accept or reject the request at its discretion and there is no tool to force any of the outcomes. The same goes to the borrower and his will to repay the loan, thus destroying money.
I don’t know why you call it automatic when almost every decision is made by choice. I think it’s more correct to say that the system is game theory based, being a combination of economic incentives that drive rational parties to a desired behavior. The problem is that the system is not sustainable in an adversarial environment and relies not only on rational but also on honest (lawful) behavior. Dishonest rational players can easily abuse the system to their benefit, which is why a supervisor is required to prevent an abuse.
And how this disproves my point that CB's are there to maintain the health of such a system?
CBs are there for that reason, indeed. The point is that you state that the system is automatic, but, in fact, in cannot work without a CB manually managing the monetary base. The fractional reserve system allows to create new money only to the extent bounded by a reserve requirement. If we reach the upper boundary, then what? The adjustment of interest rates is done by expanding or contracting the monetary base (for example, Fed’s OMO), which is a crucial condition for the entire system to work properly. The system cannot sustain without CBs and their constant manual control of the monetary base.
As for blockchain systems, it is possible to implement an algorithm that will resemble the principles of modern monetary systems. The developers of stablecoins have already introduced some concepts. For example, you can look at Saga, which is based on a fractional reserve model and can adjust the supply according to the market demand. The problem is that such projects still rely on governance and off-chain sources, as they are sharing the same shortcomings with conventional fiat systems, which is why they are not fully-fledged cryptocurrencies.