Bundesbank President Joachim Nagel has publicly shut down a proposal by French far-left leader Jean-Luc Mélenchon to simply erase the portion of France’s public debt sitting on central bank balance sheets. Nagel’s verdict: it’s illegal under EU law, and it could trigger hyperinflation.
The target in question is roughly €636 billion worth of French sovereign bonds held by the Eurosystem, primarily through the Banque de France. That represents about 18% of France’s total public debt pile, which stood at €3.536 trillion as of the first quarter of 2026, or 117.5% of GDP.
The proposal and why it keeps coming back
Mélenchon has been pushing the debt cancellation idea since June 2026 as part of his campaign for the 2027 French presidential elections. The logic, at least on paper, sounds almost elegant: since central banks already hold a huge chunk of government bonds purchased during years of quantitative easing, why not just cancel those IOUs and lighten the load?
The idea isn’t new. It surfaced during the COVID-era debt surge when a group of European economists floated similar proposals. Back then, ECB President Christine Lagarde called it “unthinkable.” Mélenchon is now making it very thinkable, at least as a campaign plank.
