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Bank of France's Moulin calls French far-left debt plan illegal and dangerous - Finance news and analysis from Global Banking & Finance Review
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Bank of France's Moulin calls French far-left debt plan illegal and dangerous

Published by Global Banking & Finance Review

Posted on September 11, 2026

1 min read

· Last updated: September 11, 2026

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Bank of France Chief: French Far-Left Debt Cancellation Plan Illegal

Controversy Over French Debt Cancellation Proposal

Bank of France Chief's Response

PARIS, Sept 11 (Reuters) - Bank of France chief Emmmanuel Moulin said on Friday that a plan by far-left leader Jean-Luc Melenchon to cancel a portion of France's national debt was "illegal, dangerous and useless."

Melenchon's Proposal Details

Melenchon, who is seeking the French presidency, has called for cancelling 18% of France's debt, which he says is held by the Bank of France, saying the move would allow for more social spending.

Potential Economic Consequences

Speaking on RTL radio on Friday, Moulin said the move would circumvent treaties, create inflation and would raise interest rates.

Historical Context and Default Concerns

"We have never defaulted on our debt since 1797 and that would be a default. It would say we do not pay the debt that we owe," said Moulin.

European Central Bank's Position

Christine Lagarde, the European Central Bank President and a former French economy and finance minister, rejected the plan on Thursday, saying creditors would punish such a move.

(Reporting by Makini Brice and Dominique Vidalon; Editing dominique Vidalonby)

Key Takeaways

  • Moulin argued cancelling France’s debt held by the central bank would breach EU law and constitute a form of default, undermining trust and monetary stability (tf1info.fr)
  • He warned that such a move would be inflationary and push interest rates higher, while historical precedent shows France has never defaulted since 1797 (tf1info.fr)
  • Mélenchon’s proposal—to “burn” the ~18 % of debt held by the Banque de France, estimated at €500‑600 billion—is widely criticized as legally infeasible under EU treaties and economically deceptive, offering no real fiscal benefit (fr.euronews.com)

References

Frequently Asked Questions

What did the Bank of France say about Melenchon's debt cancellation plan?
The Bank of France chief called the plan illegal, dangerous, and useless, warning it could lead to inflation and higher interest rates.
How much of France's debt does Melenchon propose to cancel?
Jean-Luc Melenchon is calling for the cancellation of 18% of France's national debt.
Why does Melenchon want to cancel part of France's debt?
Melenchon argues that canceling some of the debt held by the Bank of France would increase room for social spending.
What were the concerns raised about the proposed debt cancellation?
Concerns include violating treaties, triggering inflation, and raising interest rates, which constitute a default on debt obligations.
How did European Central Bank President Christine Lagarde respond?
Christine Lagarde rejected the plan, warning creditors would punish such a move by France.

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