Far-left candidate's debt cancellation plan sparks political debate in France
A far-left candidate's proposal in France to cancel debt held by the central bank has drawn sharp reactions from the prime minister and economists.
Far-left French presidential candidate Jean-Luc Melenchon's proposal to cancel public debt held by the Bank of France has drawn backlash from government officials and economists.
Details of the debt cancellation proposal
Jean-Luc Melenchon of the La France Insoumise party argued that the debt held by the central bank should be canceled. Melenchon stated that this move would lower the public debt ratio and create room for public spending.
Political repercussions and poll results
A published poll showed that Melenchon could reach the second round of next year's presidential election against far-right leader Marine Le Pen. The proposal has caused widespread repercussions in the political sphere.
Reactions from the government and economists
Prime Minister Sebastien Lecornu described the proposal as fraud in its purest form, stating that investor confidence would be shaken and interest rates would rise. Former IMF chief economist Olivier Blanchard also found the debate irrational.
Central bank and expert views
While the Bank of France declined to comment on the matter, former governor Francois Villeroy de Galhau had previously stated that such a move could force the country to abandon the euro.