PARIS — French presidential candidate Jean-Luc Mélenchon says he wants to set France's debt “on fire.” Now his allies are scrambling to spell out what he means. The leftist leader’s controversial plan to write off billions of euros worth of French debt, which has caused uproar among his political opponents and central bankers alike, is also prompting his economic advisors to try to soften his rhetoric. But Berr and other left-leaning economists have tried to reframe the debate around what they see as the grip of financial markets over sovereign debt.
However, Mélenchon isn’t tamping down his language. With polls suggesting he could qualify for the first time in a second-round face-off against far-right leader Marine Le Pen, and as rivals from more moderate parties are struggling to emerge from a jam-packed field, the 75-year-old appears keen to set France’s fiscal debate on his own terms. In a press conference with online media and influencers last June, the presidential candidate outlined his idea of “freezing the public debt held by the Bank of France at a zero interest rate,” echoing a proposal from his previous presidential campaign to convert these debts into perpetual zero-interest debt — in other words, loans with no repayment date and no interest payable.
The French central bank holds less than one-sixth of French debt, totaling some €488 billion. Mélenchon’s proposal would be like “putting the debt in the fridge,” he first said — before going on to talk about “throwing it to the fire.” The latter metaphor sparked a Europe-wide controversy later in the summer, fueled by a viral post on X reposting the clip in August. Political opponents have predicted a “financial crisis,” “ruin” or “bankruptcy” should the state fail to follow through on its financial commitments.
European Central Bank President Christine Lagarde, alongside the Governor of Germany’s Bundesbank, Joachim Nagel, and his French counterpart, Emmanuel Moulin, said that such a measure would be “illegal.” In an opinion piece published in August, Berr and other economists aligned with Mélenchon tried to cool the controversy by emphasizing the “freeze” rather than the “fire.” “Mélenchon’s idea of ‘putting the securities in the fridge’ means to remove part of the stock of French sovereign debt from the market [by placing it in the central bank’s vaults], in order to shield it from speculative attacks,” the opinion piece reads. In other words, unlike private investors, who can sell the government debt securities they hold if they no longer consider France’s economic policy to be credible — thereby driving up interest rates — the ECB, for its part, holds on to securities it has acquired until they mature: it freezes them, so to speak. The opinion piece then suggests that the central bank should maintain its holdings of public debt — what they refer to as “the freeze” — or even increase them.
These tools already exist, as the ECB introduced them during the sovereign debt crises of the 2010s and the Covid pandemic in 2020. But they are being phased out, and since central banks are independent from governments, only they can decide to use them again. The freezing metaphor, however, still allows for some ambiguity.
While Berr and his coauthors seek to freeze debt from financial markets until maturity, many in France Unbowed argue for converting the debt held by the central bank into perpetual debt — something closer to sovereign debt cryogenics. While the central bank has already purchased government debt securities on the financial markets — what the opinion piece is suggesting — it has never canceled them or converted them into perpetual debt — what Mélenchon wants. But Mélenchon continues to use the terms “freezing” and “canceling” interchangeably.
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