I'm afraid a lot of that reduction on the private side is due to bankruptcies (mainly SMEs) induced by retarded Covid response. So, not so much a conscious reduction of debt but rather debtors failing and being written off by banks. But of course, we can't let the banks fail, so guess who is taking on the failed liabilities (by bailing out banks)? The taxpayer, of course! (Fannie and Freddie all over again?)

Then again, I'm just rambling and guessing. The chart is just too conveniently explainable by debt being moved from the private to the public sector.