The European Central Bank (ECB) faces a difficult choice as the spread between French and German 10-year government bonds surged to approximately 150 basis points, a new high since the 2012 Eurozone debt crisis. French 5-year credit default swaps (CDS) also rose to their highest level since early 2013. Market speculation suggests the ECB might deploy its Transmission Protection Instrument (TPI) for intervention, but France's uncontrolled fiscal deficit and political deadlock make it difficult to meet the TPI's "unwarranted and disorderly" fluctuation conditions.

ECB officials have not yet signaled intervention. Bundesbank President Joachim Nagel emphasized price stability as central, and ECB President Christine Lagarde believes there has been no disorderly market dysfunction. If the ECB were to restart bond purchases now, it would contradict its tightening monetary policy stance (Eurozone inflation is nearing 4%, and interest rates have been raised consecutively this year). Some market participants believe that halting quantitative tightening could be a compromise, but its effectiveness is questionable given the inflationary backdrop. Bloomberg analysts point out that the key trigger for TPI activation would be whether French bond market stress spreads to highly indebted countries like Italy.