How can a central bank create money?

What will be an ideal response?

First, because the central bank operates the only authorized printing press in the country, it can actually print money to pay its bills or to acquire assets, thereby increasing the money supply. Second, the central bank can create money by increasing the reserve accounts financial institutions hold with it. For example, if the central bank buys an asset (a government bond say) from a financial institution, it credits the financial institution's reserve account at the central bank for the purchase price of the bond. Because this financial institution can now use this credit to its account to lend money to individuals and businesses, the central bank has, essentially, created money.