The monetary funds for commercial banks to expand the money supply mainly come from the following aspects. 1. The source of money supply is divided into two parts. One is that the central bank creates base money through credit, and the other is that commercial banks create derivative deposits through credit expansion. There are two ways for the central bank to create money: 1. Loans from commercial banks; 2. Buy foreign exchange (foreign exchange) of commercial banks, and the increased currency mainly appears in the form of deposit reserve of commercial banks.

1. Loans to commercial banks (i.e. common monetary policy)

Specific operations: innovative liquidity tools (SLF, MLF, TMLF, PSL), open market repurchase, spot bond trading (currently not done by the central bank), issuance of central bank bills, refinancing by commercial banks, different loan periods, loan use restrictions and collateral.

From the balance sheet of the central bank, SLF\MLF\PSL\TMLF\TLF and reverse repurchase operations in open market operations will increase the "creditor's rights to other deposit companies" on the asset side of the central bank, and at the same time increase the deposits of other deposit companies on the liability side of the central bank (that is, the deposit reserve of commercial banks). In this way, the reserve of commercial banks will exceed the statutory reserve limit, and the extra part can be extracted from the central bank and returned to commercial banks, and continue to be put on the market through credit. However, if the maturity is not extended, it will lead to the decline of creditor's rights and deposit reserves to other deposit companies, which will lead to the contraction of the balance sheet.

2. Foreign exchange means purchasing foreign exchange assets.

Specific operation: purchase foreign exchange from commercial banks in the open market through the foreign exchange trading center.

From the balance sheet of the central bank, if the central bank purchases foreign exchange, the foreign exchange on the asset side will increase, and the deposits of other deposit companies on the debt side will also increase.

1. Absorb more deposits. 2. Increase financing from other financial institutions. 3. Reduce your excess reserve in the central bank. 4. Issue commercial bank bonds.