Melenchon's Debt Cancellation Proposal Sparks Fears of Hyperinflation

France is grappling with a significant debt crisis, with its public liabilities exceeding 116% of GDP. This is worse than the US ratio of approximately 100%, based on debt held by the public.

The nation's economy has struggled with sluggish growth, despite being part of the eurozone and benefiting from European Central Bank (ECB) policies.

Far-left presidential hopeful Jean-Luc Melenchon is promoting a proposal to cancel central bank-held debt. He argues that this would enable the government to boost social spending.

Melenchon suggests taking the 18% of debt owned by the Bank of France and discarding it, rather than focusing on investor holdings. However, he has also expressed willingness to extend debt elimination beyond the Bank of France if European partners are found.

The president of Germany's central bank, Joachim Nagel, has warned that Melenchon's plan would violate the currency union's regulations and risk triggering hyperinflation.