February 6, 2017 / 5:11 PM / 3 years ago

ECB's Villeroy says exiting the euro would raise French debt costs

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 increase French borrowing costs, European Central Bank policymaker Francois Villeroy de Galhau warned in a column for Le Figaro published on Monday.

“The idea of leaving the euro and devaluing our currency to run up bigger deficits overlooks the fact that financing French debt would cost significantly more,” Villeroy said, predicting that borrowing costs could exceed 30 billion euros.

Villeroy, who also heads the Bank of France, defended the single currency’s deficit rules against those who blame them for weak French economic growth.

“If France lags (its peers) in terms of growth, it’s not because of excessive budget discipline ... but because of insufficient domestic reforms,” he said.

Villeroy’s comments come after far-right leader Marine Le Pen unveiled her manifesto over the weekend, calling for France to leave the euro.

Reporting by Michel Rose; Editing by Laurence Frost

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