Far-left candidate urges wiping out French debt, sparking political firestorm
Presidential hopeful Jean-Luc Melenchon has called for the Bank of France to erase its 18% holding of government bonds, a proposal that has drawn sharp criticism from officials and economists.
During his campaign, Jean-Luc Melenchon revived a proposal for the Bank of France to destroy the 18% of French sovereign debt it holds, claiming the action would cut the headline debt ratio of over 116% of GDP and allow more public spending. The suggestion forms part of a broader left-leaning platform that has boosted his poll numbers, placing him ahead of mainstream contenders for a potential runoff against Marine Le Pen.
Prime Minister Sebastien Lecornu condemned the scheme as “fraud in its purest form,” cautioning that it could undermine investor confidence at a time when France must secure 310 billion euros in new borrowing. While the Bank of France declined comment, former governor Francois Villeroy de Galhau noted that cancelling the bonds would jeopardise the euro and shift the loss to taxpayers. Investment banker Matthieu Pigasse praised the idea as harmless, a stance that drew criticism from ex-IMF chief economist Olivier Blanchard, who called the debate “idiotic” and warned it would erode private-sector confidence.
Why it matters
The proposal challenges EU fiscal rules and could affect France’s borrowing costs and euro stability.
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