Lagarde Dismisses Mélenchon's Debt Cancellation Plan as 'Financially Dangerous'

European Central Bank President Christine Lagarde rejected French far-left leader Jean-Luc Mélenchon's proposal to cancel part of France's national debt, calling it 'financially dangerous' and violating EU law.

Mélenchon suggested cancelling 18% of France's debt, which he claims is held by the Bank of France. He believes this would free up fiscal space for social spending as France's debt burden tops 116% of its economic output.

Lagarde compared public debt to a personal loan and warned creditors would punish such a move, saying 'I'm not going to finance you' if someone refused to repay and sought new financing. She also mentioned she would significantly increase the interest rate charged instead.

The ECB's president stated that cancelling debt is barred under Article 123 of the Treaty on the Functioning of the European Union, which she referred to as 'a pillar of stability.'