Asia's rapid accumulation of debt in recent years is holding back central banks from easing monetary policy to fight the risk of deflation, endangering private investment needed to boost faltering growth, according to Morgan Stanley.

Debt to GDP ratio in the region excluding Japan rose to 203 percent in 2013 from 147 percent in 2007, with most of the increase led by companies, analysts led by Chetan Ahya in Hong Kong wrote in a report on Wednesday. The ratio is close to or has exceeded 200 percent in seven of 10 nations including China and South Korea, they said.

Deflation risk is spreading from Europe to Asia as oil prices plunge, raising the specter of companies and consumers postponing spending and threatening a recovery in the global economy. Asia could take its cue from the US where a policy of keeping real rates low after the 2008-09 global financial crisis encouraged private-sector investment and boosted productive growth, Morgan Stanley said.

"When real rates are high, only the public sector or government-linked companies will take on leverage," the Morgan Stanley economists wrote in the report. The key concern with an approach of keeping real rates at elevated levels is that the private sector will continue to be hesitant to take up new investment, which is critical for reviving productivity, the report said.

Asia's policymakers are balancing the need to support domestic demand and curbing debt and asset bubbles. While China cut its one-year lending rate in November, its policymakers have held off on broader easing measures as they sought to avoid exacerbating a buildup in nonperforming loans.

India, South Korea, Indonesia, Thailand and the Philippines all held their benchmark rates last month. The Asian Development Bank in December cut the region's economic growth forecasts for 2014 and 2015.

In South Korea and Thailand, policymakers could tighten regulations on the household sector to prevent excessive borrowing, and cut rates to ensure that good borrowers aren't discouraged, Morgan Stanley said.

Meanwhile, with the eurozone facing the possibility of yearslong economic stagnation, its central bank is expected to soon announce its biggest stimulus measure yet.

That sounds like it should be cause for optimism. Yet some policymakers and economists in the 19-country currency union are grumbling.

They question the merits - and even see dangers - in the new stimulus program, which would involve the large-scale buying of government bonds. Mario Draghi, the president of the European Central Bank, is facing unusually outspoken opposition from a minority on his 25-member board ahead of what is expected to be a showdown policy meeting on Jan 22.