The Fed is already decentralized, no? There are branches in different regions throughout the country with their own governance, and a central board of governors to oversee the whole thing. I guess what I am asking is, why not treat banking like the utility that it is. Their is a natural monopoly on currency issuance after all, no?

Is it? The Chinese already do this. Go look at how its working out for them, the pros and cons are clear and obvious.

What do tofu dreg projects (poorly constructed buildings) have to do with banking in China?

It's the state giving itself no bid contracts. There's no financial risk (except to the buyers) and the officials who secured it get the money. The buildings aren't made to a high standard because there's no accountability for when they fail. The officials who would hold them accountable are the ones who assigned the nobid. The people who got it built already made their money.

Thats what ghost cities are about. CCP financing cities almost no one will live in to make money off the no bid contracts. People buy property in the ghost cities to move in and/or as an investment (its government-secured right? what could go wrong?) but then housing prices crash (because supply far exceeds demand), the lower classes are left holding the bag and legally prevented from refinancing. So they're making payments on a property that they bought at $300,000 even though it would only be worth $50k if they got it appraised & refinanced.

It's only possible if the government is also the bank. It's a totally conflicted situation.