France’s public debt now exceeds 116% of GDP, a ratio higher than that of the United States. Far-left candidate Jean-Luc Melenchon proposes canceling the 18% of this debt held by the Banque de France, arguing that the measure would lighten public finances and allow increased social spending. France’s prime minister warns of prohibitively high borrowing rates if the country defaulted on its debt, while the government must raise over 360 billion dollars this year. Joachim Nagel, president of the Bundesbank, stated that such cancellation would be forbidden under European treaties and could trigger hyperinflation. The spread between French 10-year bonds and German bunds stands at approximately 88 basis points, approaching its highest level since the sovereign debt crisis in 2012.
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