Lagarde dismisses Mélenchon’s French debt-wipe plan as illegal and risky

At a press conference in Berlin, European Central Bank President Christine Lagarde dismissed Jean-Luc Mélenchon’s suggestion to write off roughly one-fifth of France’s national debt, labeling the scheme financially hazardous and contrary to EU law. She explained that the debt is held by the Bank of France and that cancelling it would breach Article 123 of the Treaty on the Functioning of the European Union, a cornerstone of monetary stability.

Lagarde warned that creditors would punish such a move and that, like a borrower who defaults, France would face sharply higher interest rates. While Mélenchon claims the cancellation would free up resources for social spending, Lagarde called the proposal a “large waste of time” and emphasized that the ECB would not finance a defaulting member. Her remarks followed the ECB’s decision to raise interest rates, underscoring the institution’s focus on fiscal discipline within the euro area.