Lagarde Slams Debt-Cancellation Plan as 'Financially Dangerous'

European Central Bank President Christine Lagarde has dismissed French far-left leader Jean-Luc Mélenchon's proposal to cancel 18% of France's national debt as 'financially dangerous' and legally impossible. Speaking at a press conference, Lagarde compared public debt to a personal loan, saying that if a borrower refused to repay and then sought new financing, they would not be granted it.

Lagarde emphasized that creditors would punish such a move by increasing interest rates, making it more expensive for countries to borrow. She also noted that debt cancellation is barred under Article 123 of the Treaty on the Functioning of the European Union, which she described as 'a pillar of stability'.

Mélenchon had proposed cancelling the debt to free up fiscal space for social spending, but Lagarde rejected this idea as a 'large waste of time'.