How Does the Federal reserve Create the Money Supply The Working of commercial Banks The most important part of Federal Reserve System is the commercial bank. We thus need to discuss how commercial bank make their business Attracting deposit from the public at no or very low interest rate Using the public deposit to lend out at a higher interest rate(own the profit from the interest differential)How Does the Federal Reserve Create the Money Supply • The Working of Commercial Banks: The most important part of Federal Reserve System is the commercial bank. We thus need to discuss how commercial bank make their business – Attracting deposit from the public at no or very low interest rate; – Using the public deposit to lend out at a higher interest rate (own the profit from the interest differential);