Presumably if the debt is liquidated at 2%, it doesn't make a material difference in offering credit, since it's pretty much a write-off for the credit-issuing

Presumably if the debt is liquidated at 2%, it doesn't make a material difference in offering credit, since it's pretty much a write-off for the credit-issuing institution anyway, right? I'm not seeing how the debt collection in this case helps provide more credit for the economy - might as well just write off the non-performing debt altogether.