Bank of France Chief Says ECB Intervention Conditions Not Met as Bond Spread Widens

Bank of France Governor Francois Moulin said on Wednesday that conditions for European Central Bank intervention in French bond markets have not been met, even as he acknowledged the country's fiscal situation is serious and its bond spread has widened due to deficit concerns and political uncertainty. Speaking on France Inter radio, Moulin described the situation on bond markets as "complicated" but stopped short of calling it a crisis, saying France is not yet at a point where it needs to seek a solution from the ECB.

Moulin identified the French spread over German bunds as a direct consequence of the country's deficit and lingering political uncertainty, and stressed that reducing the deficit and stabilizing the debt trajectory are essential steps. He described France as being in a "zone of risk" on its budget deficit and said it is vital for the country to pass a budget by year end. He also flagged the 2027 France budget as very important for reassuring markets, signaling that investor confidence will hinge on the government's medium-term fiscal commitments.

While Moulin's remarks confirm the ECB's current tools are not being deployed for France, his warnings about a complicated bond market environment and the urgency of near-term budget action underline the pressure Paris faces to demonstrate fiscal credibility to investors.