French public debt is no longer merely a simple accounting variable. It has become the fragile heart of our economic sovereignty. Trapped in a model inherited from the 19th century, France will need to refinance itself next year to the tune of just over €300 billion—a complex and risky exercise.
A Fragmented and Vulnerable System
French debt consists of hundreds of issuance lines, with varying maturities and often illiquid securities. This fragmentation creates a seemingly sophisticated structure, yet one that is vulnerable to interest rate volatility and financial market fluctuations.
Designed in an era when the economy relied on paper and teller windows, this system struggles to adapt to the contemporary world. Since the 2008 crisis, sovereign bonds have played a central role in financial stability, serving as collateral for banks. However, French debt remains less liquid than that of other major economic powers, such as Germany or the United States, which represents a major handicap.
Debt: A Strategic Public Good
It is essential to understand that public debt is more than just a financing mechanism. It is a fundamental public good, comparable to currency or infrastructure, that only a sovereign state can produce on a large scale to stabilize its economy.
Toward Perpetual Debt: An Innovative Solution
One bold avenue consists of converting French debt into perpetual annuities—that is, securities without maturity dates—offering two complementary forms:
A floating-rate annuity, functioning like a sovereign electronic currency, with a stable nominal value, remunerated at the money market rate (Euribor). These securities would be electronically exchangeable, usable for tax payments or as bank collateral.
A fixed-coupon annuity, paying an eternal yield without repayment of the principal, thereby creating a stable and sustainable source of financing for the state.
These perpetual bonds (called perpetual OATs) could have an initial coupon of 2.5 to 3% and would be redeemable by the Public Treasury as needed. This unification of debt would simplify and make the market more flexible, increasing liquidity and reducing liquidity premiums by 20 to 50 basis points, resulting in annual savings of €6 to €15 billion.
An Historical Legacy to Revisit
This idea is not new. As early as the 13th century, the Republic of Venice financed its expeditions with perpetual monti. In France, Colbert had established annuities on the Hôtel de Ville, which allowed Louis XIV to raise funds without defaulting. In the 19th century, the United Kingdom maintained a debt equivalent to 250% of GDP thanks to its perpetual consols, which became the foundation of the global financial system.
These historical examples demonstrate that perpetual debt can be synonymous with stability, rather than a headlong rush forward.
Major Economic and Financial Benefits
The implementation of a unified and perpetual debt would allow for:
Reducing the cost of public financing, with a decrease in liquidity premiums and interest rates.
Eliminating the annual refinancing risk, a source of stress and vulnerability.
Facilitating debt management during periods of economic tension, by allowing coupon payments in the form of new perpetuities.
Protecting investors, particularly insurers and retirees, through inflation-indexed perpetuities.
Strengthening the European single currency by providing the ECB with liquid and standardized sovereign collateral.
A Credible Scenario for 2030
By 2030, France could borrow €350 billion per year to finance sustainable infrastructure at stable rates, while benefiting from an additional 0.5 percentage point of GDP growth. The Agence France Trésor (AFT) could invite OAT holders to voluntarily exchange their securities for these new perpetuities, with a symbolic premium. The operation would not be a “disguised default” because the nominal capital would remain intact, coupons would be maintained, and the value of the securities could even appreciate due to improved liquidity.
Unlike the 2012 Greek crisis, this reform would preserve France’s sovereign rating (currently A+) and avoid costly economic contagion.
Beyond the Technical Aspects
Beyond the technical aspects, this reform embodies a renewed pact of sovereignty. In a world marked by revolving debts and growing monetary uncertainty, perpetuity offers a new symbol of lasting trust. It transforms debt into a budgetary architecture for the digital age, where stability arises from continuity, not from repayment.
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