European Central Bank President Christine Lagarde has rejected Jean-Luc Mélenchon’s proposal to cancel 18% of France’s national debt, saying the move would be financially dangerous and illegal under Article 123 of the Treaty on the Functioning of the European Union. Mélenchon says the targeted debt is held by the Bank of France, while earlier estimates described roughly €600 billion to €636 billion as sovereign debt held by the Eurosystem. France’s debt burden is above 116% of economic output, with earlier figures putting total debt at approximately €3.536 trillion and 117.5% of GDP. Mélenchon’s La France Insoumise party argues cancellation would create fiscal room for social spending. Lagarde said creditors would respond by demanding significantly higher interest rates, warning that any attempt to circumvent EU debt-financing rules would violate the treaty. France plans to issue a record €310 billion in medium- and long-term debt in 2026. Elevated French OAT yields relative to German bunds and wider spreads have heightened concern that renewed political support for cancellation could raise borrowing costs, widen deficits and worsen the debt ratio. Bundesbank President Joachim Nagel has warned of hyperinflation and damage to central-bank independence, while broader market effects could include higher-for-longer ECB rates, wider Italian BTP spreads and pressure on the euro against the dollar.