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Christine Lagarde warns that government instability in eurozone is a concern
European Central Bank (ECB) President Christine Lagarde stated on Monday that any risk of government collapse within the eurozone is a matter of concern. Speaking on Radio Classique, she underlined the impact of political instability on financial markets and economic stability.
“What I have observed over the past six years in this role is that political developments and emerging risks have a clear impact on the economy, on how financial markets assess country risks, and are therefore a concern for us,” Lagarde explained.
Her comments come as French Prime Minister François Bayrou is set to request a vote of confidence in the National Assembly next week, a move he is unlikely to win. This would potentially lead to his resignation, adding to political uncertainty in France.
Despite the situation, Lagarde ruled out the prospect of France requiring assistance from the International Monetary Fund (IMF), which she led from 2011 to 2019.
“Countries turn to the IMF in cases of severe current account deficits or when they cannot meet their financial obligations. This is not the case for France today,” she said. According to Lagarde, the IMF would likely respond that conditions are not met and that France must reorganize its own public finances.