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ECB's Villeroy warns against Le Pen's euro exit plans
March 25, 2017 / 10:12 AM / 6 months ago

ECB's Villeroy warns against Le Pen's euro exit plans

FILE PHOTO: French Central bank Governor Francois Villeroy de Galhau attends the 2016 Institute of International Finance (IIF) Spring Membership meeting in Madrid, Spain, May 25, 2016. REUTERS/Susana Vera/File Photo

PARIS (Reuters) - Ditching the euro to return to the franc would harm the purchasing power of the French and increase government borrowing costs, European Central Bank policymaker Francois Villeroy de Galhau said in an interview on Saturday.

In a veiled warning against far-right party leader Marine Le Pen’s euro-exit plans, Villeroy said the euro had brought low borrowing costs and protection against inflation.

Villeroy, who is also the head of France’s central bank, did not mention Le Pen by name.

“Exiting the euro and devaluating our currency by 20 percent would mean that the cost of imported goods would increase by the same amount,” he told the Ouest France newspaper in an interview published on the 60th anniversary of the European Union’s founding treaty.

Euro membership has allowed France to benefit from lower borrowing costs, leading to savings of 30-60 billion euros per year, Villeroy said, adding that ditching the currency would mean giving up those savings.

Some 72 percent of French voters oppose a return to the franc, an Ifop poll published in Le Figaro daily showed.

But there is a sharp difference between people who plan to vote for Le Pen in the April 23 first round of the presidential election and others. Some 67 percent of Le Pen voters back ditching the euro, the survey showed.

Le Pen has said she would seek to renegotiate France’s EU membership with the aim of returning to the franc and cutting back the bloc to a loose cooperative of nations. She would put the outcome of the talks to a referendum.

Opinion polls see her qualifying for the May 7 presidential election run-off but losing it to the centrist, pro-EU Emmanuel Macron. But there are many undecided voters.

Reporting by Ingrid Melander; Editing by Mark Potter

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