Abstract: Do not try to reject debts, as a market economy is a debt economy. In a market economy, debts are financial tools for asset creation and macro-regulatory tools of governments. Whether the debt risks will spread or converge depends on whether two virtuous cycles can be realized: the cycle of debts and assets at the micro level, and the cycle of debts and economic growth at the macro level. It also depends on whether the micro risks are public and macro, and whether the macro risks are long-term and micro. To deal with debt risks, we need not only to use fiscal and monetary policies, but also to carry out deeper structural reforms. Financial structure is an important variable affecting macro debt risks, and financial structural reform is the key to control debt risks.
