Mélenchon Suggests Wiping Out 18% of France's €3.5 Trillion Debt

French presidential candidate Jean-Luc Mélenchon has sparked controversy by suggesting that he would cancel nearly a fifth of France's debt, held by the Banque de France, as president. The proposal, made while campaigning for the La France Insoumise party, has been met with criticism from economists who warn it could lead to economic instability and potentially even trigger interest rate hikes.

Mélenchon's suggestion would see 18% of France's €3.5 trillion debt disappear in an instant, sparking warnings that this move would be economically illiterate and could lead to a breakdown in trust among other creditors. The French government's current debt-to-GDP ratio is already at 117.5%, with the country facing potential economic sanctions from the European Union if it fails to bring down deficit spending.

Olivier Redoulès, director of studies at the Rexecode Institute think tank, has warned that such a move would instantly trigger inflation and could result in France being expelled from the European Union and removed from the euro currency. The economist noted that cancelling debt is simply another form of money printing by the federal government.