The correct answer is option 'B': Commercial banks.

Explanation:

Commercial banks play a significant role in the process of money creation or credit creation. Here's a detailed explanation of how commercial banks create money:

1. Fractional Reserve Banking:
Commercial banks operate under a system known as fractional reserve banking. This means that they are required to hold only a fraction of their customers' deposits as reserves, while the rest can be lent out or invested.

2. Deposit Creation:
When customers deposit money into their bank accounts, it becomes a liability for the bank. However, the bank can use a portion of these deposits to extend loans to borrowers who need funds for various purposes. This process of lending money creates new deposits in the accounts of borrowers.

3. Money Multiplier Effect:
The money creation process is further amplified by the money multiplier effect. When a bank lends money, the borrower typically uses it to make payments to other individuals or businesses. These recipients of the loaned money deposit it into their bank accounts, creating additional reserves for the bank. The bank can then lend out a portion of these new deposits, leading to further deposit creation. This process continues, resulting in a multiplication of the initial deposit through successive rounds of lending.

4. Reserve Requirements:
While commercial banks have the ability to create money through lending, they are still subject to reserve requirements imposed by the central bank. Reserve requirements dictate the minimum amount of reserves that banks must hold against their deposits. These requirements serve as a mechanism to control the amount of money that can be created by commercial banks and maintain stability in the financial system.

5. Central Bank's Role:
Although commercial banks create money, the central bank plays a crucial role in regulating and overseeing this process. The central bank sets the reserve requirements, conducts monetary policy, and acts as the lender of last resort to ensure the stability and integrity of the banking system.

In conclusion, commercial banks create money through the process of fractional reserve banking, deposit creation, and the money multiplier effect. While they have the ability to create credit, they are regulated by central banks to maintain the stability of the financial system.

Actually it is done by both commercial bank nd central bank but seeing from public's point of view credit is created by commercial bank as that credit is granted to public but credit which is created by central bank is created for these commercial banks only now taking about how commercial bank creates credit so the answer is that it uses instruments like derivative deposits credit multiplier n various other instruments which are self explanatory