Final answer:
Central banks do not compete with commercial banks as their roles within the economy are fundamentally different. Central banks, like the Federal Reserve in the U.S., regulate the money supply and interest rates, while commercial, investment, and retail banks offer deposit and loan services to the public.
Step-by-step explanation:
The institution that does not compete with commercial banks is central banks. Commercial banks are public or private institutions that provide financial services, such as accepting deposits and offering loans to individuals and businesses. Examples include retail banks and investment banks. Credit unions are member-owned financial cooperatives that also provide similar banking services to their members, often competing with commercial banks for customer deposits and loan activities. However, central banks, such as the Federal Reserve in the United States, are charged with overseeing the monetary system for a nation (or group of nations), regulating the supply of money and interest rates, and serving as a lender of last resort to the banking sector during times of financial distress. Consequently, central banks do not compete with commercial banks as their roles are fundamentally different within the economy.