Melenchon proposes Bank of France cancel 18% of national debt

September 6, 2026 at 12:07 AM2 min

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French presidential candidate Jean-Luc Melenchon is campaigning on a plan to have the central bank cancel its holdings of French debt, which he says amounts to 18% of the total. The proposal comes as France's public debt tops 116% of GDP and the government must raise more than $360 billion this year. Melenchon is polling to reach a runoff against Marine Le Pen in next year's election.

Key Facts

France's public debt exceeds 116% of GDP, higher than the U.S. ratio of roughly 100% when measured by publicly held debt.
Melenchon says the Bank of France holds 18% of French debt, which he proposes to cancel.
The French government must raise more than $360 billion from bond markets this year.
The yield spread between French and German 10-year bonds is about 88 basis points, near the highest since the 2012 European debt crisis.
Bundesbank chief Joachim Nagel says cancelling national debt is prohibited under European treaties and could lead to hyperinflation.

Debt Cancellation Proposal

Jean-Luc Melenchon, the far-left candidate in France's presidential race, is campaigning on a plan to have the central bank cancel its holdings of French debt. He said the Bank of France holds 18% of the national debt, and that this portion should be 'chucked in the fire'. Melenchon argues that a lighter debt burden would allow the government to spend more on social programs. He hinted that debt cancellation may not stop with the Bank of France, suggesting allies could be found in Europe.

Economic and Market Context

France's public debt now tops 116% of GDP, worse than the U.S. ratio of roughly 100% when measured by publicly held debt. The French government must turn to the bond market to raise more than $360 billion this year. The yield on French 10-year bonds was about 88 basis points above equivalent German yields, nearing the highest spread since Europe's debt crisis in 2012. France's economy has been mired in low growth in recent years, while the AI boom is turbocharging America's GDP.

Opposition and Legal Constraints

France's prime minister has warned that reneging on the national debt would force the country to borrow at exorbitant interest rates. Bundesbank chief Joachim Nagel, a member of the European Central Bank Governing Council, said Melenchon's idea is forbidden under the currency bloc's rules. Nagel told Le Monde that no central bank in the Eurosystem nor the ECB is allowed to cancel national debt, as it would constitute monetary financing of government, prohibited under European treaties. He added that such a move could lead to hyperinflation.