For instance, interest rate ceilings or requirements that increase banks’ and other financial institutions’ demand for public debt can be used to reduce the interest rate burden. Financial repression of this form was common after World War 2 and led to rapid contractions in debt/GDP ratios. Of course, such regulations merely amount to taxation of the holders of public debt.
While it may facilitate debt reduction, it will lead financial markets to worry that it may happen again, and therefore cause them to demand higher interest rates to purchase government debt in the future. Thus, reducing the debt in this way may not be desirable. In any case, it presumes a regulatory environment that is very different from that of today.