“Projet de peur”.

Marine Le Pen’s plans to take France out of the eurozone would raise the country’s debt costs by €30bn a year, the country’s central bank chief has said, in the latest major warning from France’s economic establishment over a prospective “Frexit”.

François Villeroy de Galhau, the governor of the Banque de France, placed a notional cost on the French treasury from a eurozone exit after Ms Le Pen’s far-right National Front party has fleshed out its plans to redenominate around €1.7tn of the country’s outstanding debt into a new currency within six months of coming into office

Last week, Benoît Cœuré, France’s most senior European Central Bank official, said a decision to exit the single currency would consign France to “impoverishment“, high unemployment and inflation.

Leading rating agencies have also warned a Frexit would amount to the biggest sovereign default in history should French debt be redenominated into a new franc, which is expected to depreciate sharply in value against the euro (see chart below).

Speaking to French radio on Monday, Mr Villeroy de Galhau said he did not want France to ditch the single currency and cautioned against Ms Le Pen’s plans to embark on a major spending blitz where the central bank would finance government spending.

This form of debt “monetisation” was prohibited by every major economy in the world and threatened the independence of the central bank, said Mr Villeroy de Galhau.

His warnings over spiraling debt costs come as investors have sold off French bonds ahead of the presidential election in late April and early May.

France’s 10-year bond yields – which reflect the government’s borrowing costs – have climbed from a record low 0f 0.1 per cent to over 1 per cent since September. The country’s debt-to-GDP ratio stands at the highest in over two decades at 94 per cent of economic output.

The euro had helped bring down French interest rates by 1.5 percentage points said Mr Villeroy de Galhau, who added the single currency was a “solid” currency that had been good for the poor.

Read more: How to hedge against a Frexit

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