The dirty little secret of the entire modern financial world is that the remit of banks is to get people to feel their money is safe, thereby convincing them to

The dirty little secret of the entire modern financial world is that the remit of banks is to get people to feel their money is safe, thereby convincing them to deposit it, and then use it to make loans way in excess of how much money they hold, thereby creating the ease of access to capital that the economy needs. And as long as people feel their money is safe, it is safe, because loaning money out is actually pretty reliable if you do it sensibly, the bank will be paid back eventually. Unless everyone wants to take their deposits out at once and buy treasuries instead! It's very reasonable to criticise commercial banking for delivering such poor value to depositors that narrow banking looks like a better option, but regardless, if that's the situation, your choice is between suppressing narrow banking and allowing the collapse of the entire system. You cannot reasonably expect an institution like the Reserve to make the other choice there.