The balance sheet is made up of assets and liabilities.
The nature of the Fed‘s assets and the Fed’s balance sheet is so simple that anything the Fed spends money on becomes part of its assets.
The Federal Reserve releases liquidity through massive purchases of Treasury bonds and MBS, making excess reserves, namely other deposits held by depository institutions, the main component of its liabilities.
The two asset segments of the Fed’s balance sheet are important.
On the one hand, changes in the asset account of the Fed’s balance sheet will cause changes in the sum of reserves, and therefore changes.
On the other hand, the Fed’s balance sheet because these assets are higher than liabilities, the Fed is making billions of dollars in revenue every year, so the assets of the Fed’s balance sheet are earning income, and the liabilities are not paying costs.
