Lagarde Rejects Mélenchon's Debt Cancellation Proposal as EU Treaty Violation

European Central Bank President Christine Lagarde has rejected French presidential candidate Jean-Luc Mélenchon's proposal to cancel France's debt held by the central bank. Mélenchon, who is running for president in April next year, wants to cancel the 18% of France's debt that is currently held by the Banque de France.

Lagarde called the proposal 'really not a good idea' and said it would be a 'clear violation of the treaty' on the European Union. This move has already drawn criticism in France, with French Prime Minister Sébastien Lecornu saying it would 'destroy France's most important asset', trust.

Mélenchon first floated the idea during his 2022 presidential campaign and revived it last month while on the campaign trail. He described the process of cancelling debt as simply going to the Banque de France, taking the debt securities, and throwing them into the fire.