How Does the Federal reserve Create the Money Supply Consider an initial increase in high powered money, say 100 millions dollars. This might occur when the central bank buys bonds at open market operation. What is the total money creation for this activity of central bank?How Does the Federal Reserve Create the Money Supply • Consider an initial increase in high powered money, say 100 millions dollars. This might occur when the central bank buys bonds at open market operation. What is the total money creation for this activity of central bank?