At the limit, financial assets should simply mirror banknotes on the liability side of the central bank’s balance sheet. But institutional arrangements do matter. Prior to the crisis, the Federal Reserve (Fed) dealt with a small number of counterparties and mostly held Treasuries directly on its balance sheet.
By contrast, the lack of a single fiscal issuer and a fragmented banking sector along national lines required that the ECB carried out repos with a broad range of counterparties against a broad range of collateral.