Jean-Luc Mélenchon proposes freezing or cancelling France’s public debt

French presidential candidate Jean-Luc Mélenchon has proposed freezing or cancelling public debt held by the central bank to shield the nation from financial markets, sparking sharp controversy across Europe. The 75-year-old leader of the left-wing party France Unbowed (La France Insoumise) defended the proposal during a June campaign event, suggesting the state could place government securities into what he initially termed a refrigerator before later using the metaphor of throwing the debt into a fire.

Political Repercussions and Central Bank Warnings

Political opponents warned of impending financial ruin, bankruptcy, and systemic crisis if the French state were to default on its obligations. European Central Bank President Christine Lagarde, alongside German Bundesbank President Joachim Nagel and French central bank head Emmanuel Moulin, stated that such a measure would be illegal.

Eric Berr, an economist at the Institut La Boetie think tank linked to Mélenchon’s party, argued that the candidate’s statements successfully injected his policy ideas into the national budget debate. Recent polling indicates that Mélenchon could qualify for a presidential runoff against far-right leader Marine Le Pen, giving his unorthodox economic proposals substantial visibility as moderate rivals struggle for traction.

Mechanics of the Proposed Debt Freeze

The French central bank currently holds less than one-sixth of France’s total public debt, which amounts to approximately 488 mld euro (2 bln 139 mld zł). Berr and supporting economists clarified in an August opinion article that the core aim is to withdraw a portion of government debt from private markets by moving it into central bank vaults.

Unlike private investors who can sell government bonds and drive up interest rates if they lose confidence in state fiscal policy, the ECB holds acquired securities until maturity. Berr stated that the key issue is eliminating national dependence on financial markets rather than pursuing outright debt cancellation.

Distinction Between Freezing and Cancellation

While economists like Berr advocate for holding the debt until maturity to protect against speculative attacks, many members of France Unbowed push for transforming central bank-held debt into perpetual loans with zero interest. Mélenchon himself has used the terms freezing and cancellation interchangeably, maintaining during a September 12 speech that debt securities held by the ECB should be either frozen or cancelled.

Mélenchon’s program team explained that these varied terms represent multiple technical options for neutralizing debt held by the central bank. Public polling published in September indicated that 43 percent of respondents reacted favorably to the ideas, setting Mélenchon apart from political rivals on the right and center who prioritize strict fiscal discipline and pension reforms.