Just days after Michael Noonan singled out Sweden by suggesting it was one of the countries to emulate, the country is showing signs of problems.
The governor of the country's central bank said efforts to contain record consumer debt in the largest Nordic economy have fallen short as financial system risk continues to swell.
Governor Stefan Ingves, who has kept the Riksbank's benchmark rate at 0.25pc and reiterated a plan to start tightening monetary policy at the end of 2015, said household debt levels must fall to restore balance to the country's banking system.
"Debt is continuing to rise and that means that the risks in the Swedish financial system are increasing all the time and that's not good," Ingves said after a press conference in Stockholm. "We need to put in place policies in Sweden that gradually reduce the debt ratio."
The world's oldest central bank is struggling to find the right policy mix to address the threat of deflation without fuelling record consumer debt. Households owe their creditors about 175pc of disposable incomes, the central bank estimates.
"I'm very worried about households' rising indebtedness and that's an issue that also needs to be dealt with outside of monetary policy," Ingves said.
Yet the bank has come under pressure to do more to fight the threat of deflation. Consumer price growth has lagged behind a 2pc target for almost three years and Nobel Laureate Paul Krugman has warned that Sweden faces a Japan-like deflation trap.
In July, the Riksbank responded by cutting its repo rate by half a point from 0.75pc, a bigger move than predicted by most economists. The bank's six-member board was split over the size of the cut, as a majority overrode Ingves's vote for a smaller move.
Economists at Swedbank and Royal Bank of Scotland said the Riksbank may need to resort to unconventional measures such as quantitative easing to fuel consumer price growth. Ingves said there's little scope left for the bank to continue cutting rates.