Le spread has reached today 150 basis points. The question on everyone's mind is: can the ECB intervene? And if so, can it activate TPI? My personal view is that it cannot. This question and the situation we have reached was the central question motivating "Crisis Cycle" , my Princeton University Press book, with @masuch_klaus and @JohnHCochrane. The purpose of TPI is to be used "in jurisdictions experiencing a deterioration in financing conditions not warranted by country-specific fundamentals." The French problem is a deterioration in country-specific fundamentals: 5.4% deficit in 2026, debt increasing towards 122%, the undoing of the pension reform. The ECB's text says TPI purchases end when tensions "are due to country fundamentals." So you cannot start when you are in the ending conditions. Also, the 3rd test of TPI says: is the debt trajectory sustainable? Lagarde has said (see Klaus' tweet below) it is "not on path to be brought back under control". I think Lagarde is answering clearly the question on the 3rd test. On paper, France passes two tests ("Compliance with EU fiscal framework? "The Commission said in June yes; And "severe macro imbalances" as given by an open excessive imbalance procedure, again ok on paper). If France needs the ECB, there is a route: an ESM program, like the ones during the Euro crisis, requiring reforms (basically getting the pensions in order will suffice), plus the OMT which allow the ECB to act when a country is subject to a program. If the ECB calls this current situation a liquidity problem, we will have an open route to monetary bailouts. Link to the TPI press release (the only existing public document): ecb.europa.eu/press/pr/date/…