Lagarde and Moulin see red over far-left pledge to 'burn' French debt
France’s central bank chief has denounced far-left presidential candidate Jean-Luc Mélenchon’s call to cancel part of the country’s debt, arguing that the “dangerous” proposal would trigger a French exit from the eurozone.
Speaking to French radio station RTL on Friday, Emmanuel Moulin said that Mélenchon’s campaign pledge to “set fire” to the 18% of France’s debt held by its central bank would also spur inflation and push up borrowing costs, at a time when French bond yields are already at their highest level since 2008.
“The eurozone is a co-owned property,” said Moulin, who took over the governorship of the Bank of France in June and previously advised conservative former President Nicolas Sarkozy during the Greek sovereign debt crisis. “If we don’t pay the maintenance fees, the other co-owners will tell us, ‘You’re out.’”
“It is illegal because it is contrary to the treaties… dangerous because it creates inflation [and] useless [because it] does not reduce the budget deficit,” he added.
