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State the Monetary base and the supply of money - central bank
It is not possible for the central bank to print and distribute money - that would increase their debt without increasing their assets. Instead, they change the monetary base by buying and selling financial assets (usually government bonds) in so-called open market operations.
Let us say that the central bank buys government securities for 100 million. They can pay for these bonds simply by printing new bills to the amount of 100 million. At first this may seem suspicious and "too simple". But remember that outstanding notes count as a liability for the central bank. When it buys the government securities, its assets will increase by exactly the same amount as its liabilities.
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