Lagarde Rejects Mélenchon's Debt-Cancellation Plan as 'Financially Dangerous'

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

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

Lagarde, a former French economy and finance minister, compared public debt to a personal loan, saying that if a borrower refused to repay and then sought new financing, 'I'm not going to finance you.' Instead, she would increase interest rates significantly.

Lagarde also emphasized that Article 123 of the Treaty on the Functioning of the European Union bars debt cancellation. She described this treaty as 'a pillar of stability' and stated that any effort to circumvent debt financing rules would be a direct violation of it.