ECB chief Lagarde rejects Mélenchon's debt cancellation proposal

European Central Bank (ECB) President Christine Lagarde on Thursday criticised a proposal by left-wing French presidential candidate Jean-Luc Mélenchon to cancel France’s debt held by the central bank.

Lagarde said the proposal by the La France Insoumise (LFI) leader was “really not a good idea” during a press conference following the ECB’s announcement of another increase in its key interest rates.

The president added that the move would amount to a “clear violation of the treaty” on the European Union.

Mélenchon’s proposal essentially entails cancelling the 18% of France’s debt that is currently held by the country’s central bank. He first floated the idea during the COVID-19 pandemic and revived the controversial call last month while on the campaign trail.

The proposal has already drawn criticism in France. Philippe Aghion, winner of the 2025 Nobel Prize in Economics, described it as “catastrophic”, while French Prime Minister Sébastien Lecornu said it would “destroy France’s most important asset”, namely “trust”.

Mélenchon first floated the idea of cancelling the debt during his 2022 presidential campaign. In August, he revived the proposal, saying: “You just have to go to the Banque de France, take the debt securities and throw them into the fire.”

France will hold its presidential election in April next year. A recent poll has given Jean-Luc Mélenchon a good chance of progressing to a second-round run-off, with the Toluna-Harris Interactive poll indicating his support to be around 16%, up from 12% in April.

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