The role of debt in financial crises is well established. Credit booms – in mortgage debt, in debt to the non-tradable sector (in particular construction and real estate), and asset price bubbles fuelled by credit – are often followed by economic underperformance or full-blown financial crisis. Public and private debt increases in the aftermath of global recessions, and after reaching high levels tend to exert drag on GDP growth. The costs of financial crises are larger than the costs of normal