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Marine Le Pen has a plan in case she wins and France starts bleeding money

  • Le Pen said could use capital controls if she wins the presidential election and triggers a flight of money out of France.
  • "I found her comments strange because, by saying that, she essentially admitted her policies would cause that kind of turmoil," said Charles Lichfield of Eurasia Group.
Marine Le Pen, French National Front (FN) candidate for 2017 presidential election, speaks during an interview with Reuters in Paris, France, May 2, 2017.
Charles Platiau | Reuters
Marine Le Pen, French National Front (FN) candidate for 2017 presidential election, speaks during an interview with Reuters in Paris, France, May 2, 2017.

Marine Le Pen, the far-right French presidential candidate, told Reuters on Tuesday that she could use capital controls if she wins the presidential election and triggers a flight of money out of the country.

Capital controls allow a government to limit the flow of money into or out of a country. There are worries that France could get hit by capital flight if it negotiates to bolt from the European Union, as Le Pen has promised to do.

"I found her comments strange because, by saying that, she essentially admitted her policies would cause that kind of turmoil," said Charles Lichfield, Europe associate at Eurasia Group.

Le Pen has been a staunch proponent of taking France out of the European Union and out of the euro currency. She told Reuters she would replace it with something similar to the European Currency Unit, a basket of currencies that preceded the euro. That would exist alongside a national currency.

Capital markets breathed a sigh of relief after the first round of the French presidential election on April 23, when Le Pen and centrist Emmanuel Macron advanced to Sunday's runoff vote. The euro shot up to a 5-1/2-month high, while a rally in European equities spilled over into U.S. trading.

Macron, contrary to Le Pen, is in favor of keeping France in the EU and is expected to win the runoff by a wide margin, according to recent polls.

That said, the polling industry has been a terrible predictor of a number of global events, most noticeably the U.S. election and the United Kingdom's own referendum to leave the EU.

'Capital controls would be a must'

If Le Pen were to somehow win, "capital controls would be a must," said Andrea Montanino, director of the global business and economics program at the Atlantic Council.

"If you don't have capital controls, you will have a massive outflow" of cash out of France, he said. "And, if the banks lose liquidity, they could fail."

Le Pen made her comments on capital controls as she is scrambling to broaden her appeal beyond the base that voted for her in the first round of the election. France holds two rounds in its presidential races.

This week, Le Pen held a major rally in the Paris suburb of Villepinte, hoping to broaden her appeal. While she has gained ground, she has not managed to significantly narrow the gap with Macron in the polls.

Macron is seen winning on Sunday with 60 percent of the vote, according to Opinionway, a French polling firm. That said, Le Pen might have one more chance to make it a close race.

"The next test will be tonight at the televised presidential debate, in which Macron has a lot more to lose," said Eurasia Group's Lichfield.

The debate will be held Wednesday afternoon ET.

Watch: What could the French election mean for the markets?