I am not an expert or even hobbyist in paper finance, but the author did address your point, a few sentences later: "JP Morgan can't create reserves, it can only borrow or buy them."
I believe the implication is that investment banks can not perform certain actions with their own money due to 2008-2010 reforms: for instance the Volker rule https://www.investopedia.com/terms/v/volcker-rule.asp
>What exactly is this money, and how is it created?
It's not created. While banks do have the capacity to "create" money by lending they are also are an actual business. i.e. it's not their only source of money
They charge people a transaction fee and use said revenue to pay salaries and buy coffee machines. Just like any other biz.
There are also strict client money rules to keep the business side and the lending side separate.