Emmanuel Moulin, the Governor of the Bank of France, stated on October 7 that while the economic situation in France is serious, there is currently no need for support from the European Central Bank (ECB). This comes as concerns grow over rising government bond yields and the potential for a crisis to spread across Europe.
In an interview with France Inter radio, Moulin said, "Given the current situation, I believe there is no need for the ECB to intervene right now." He also serves as a member of the ECB's Governing Council.
Moulin emphasized, "The role of the ECB is not to solve the fiscal problems of individual countries. The ECB exists to maintain inflation around 2%." He added, "There is no need to look for solutions from the ECB. The solutions lie within our own country," highlighting that France can address its issues by passing a budget aimed at reducing the fiscal deficit.
In a separate interview with the Financial Times, Moulin acknowledged that recent movements in the bond market are serious and concerning, but he expressed confidence that France can regain investor trust through fiscal consolidation. He stated, "We must take control of our own destiny."
Recently, the cost of borrowing for French government bonds has surged amid a global sell-off in bonds. Last week, the yield on France's 10-year bonds reached its highest level since the 2000s.
As a result, the euro has weakened, falling below $1.12 on October 6, marking its lowest point in 17 months. It has declined by more than 4% since the beginning of the year. Markets are concerned that France's fragile fiscal situation could spread across Europe.
The sell-off in French government bonds is driven by rising national debt and political uncertainty, increasing investor concerns about fiscal stability. The rise in bond yields has also raised the government's borrowing costs, intensifying pressure to reduce the fiscal deficit.
In response, the French government is pushing for the passage of a budget that aims to reduce the projected fiscal deficit, expected to reach 5.4% of GDP this year, to 5% by 2027. However, significant challenges are anticipated in passing the budget due to opposition from far-right and far-left parties.
* This article has been translated by AI.
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