By Josh Zumbrun 

Christine Lagarde submitted her formal resignation as managing director of the International Monetary Fund to prepare for the nomination process to be the next president of the European Central Bank and to allow the IMF to begin finding her successor.

Ms. Lagarde was announced as the leading candidate for the ECB job two weeks ago, and had relinquished leadership of the IMF at that time, but she had not resigned. Her resignation will formally take effect Sept. 12.

She announced her formal resignation in a statement Tuesday, saying "I have made this decision in the best interest of the Fund, as it will expedite the selection process for my successor."

Day-to-day leadership of the fund has already been handed over to David Lipton, the American who is the IMF's No. 2 official as the first deputy managing director.

Her term had been scheduled to run through 2021, but by stepping down now, the IMF can immediately begin the process of finding her successor. The IMF's executive board, composed of 24 directors who represent the 189 countries that collectively own the IMF, will formally undertake the search.

Though the position is ostensibly open to nominees from around the world, in practice, the top IMF job has always gone to a candidate selected by European governments, part of an informal arrangement in which Americans get to pick the president of the IMF's sister institution, the World Bank.

Ms. Lagarde has stepped down at an opportune moment, because the finance ministers of the Group of 7 economies are meeting in Chantilly, France on Wednesday and Thursday for a long-scheduled summit. The G-7 comprises the U.S., Germany, France, U.K., Italy, Japan and Canada, and its meetings include representatives from the European Commission.

European representatives at the G-7 summit in France will agree on a common candidate to succeed Ms. Lagarde at the IMF, according to two European officials. The discussions will take place on the sidelines of the formal meeting on Wednesday, these officials said. A candidate with the support of the G-7 would be all-but-guaranteed to win IMF board approval.

European officials have already made public their desire to preserve their prerogative in selecting the IMF leader. Earlier this year, European capitals all supported Washington when it nominated David Malpass, the top international official at the U.S. Treasury Department, to lead the World Bank; he took office in April with no formal challengers to his candidacy.

A number of top central banking and finance officials could fit the bill for Europe. Bank of England Governor Mark Carney, who also holds Irish and Canadian citizenship, has a term that expires at the end of January and did not rule out considering the top IMF job.

Dutch media has reported that the Netherlands wants Jeroen Dijsselbloem to be considered as a candidate. Mr. Dijsselbloem is the former finance minister of the Netherlands and former president of the Eurogroup -- the collective of euro area finance ministers.

For Ms. Lagarde's part, the move allows her to prepare to assume the ECB presidency in November. Current ECB President Mario Draghi's term lasts until Oct. 31.

The IMF's executive board issued a statement Tuesday praising Ms. Lagarde's tenure and saying it would "initiate promptly the process of selecting the next Managing Director."

Write to Josh Zumbrun at Josh.Zumbrun@wsj.com

(END) Dow Jones Newswires

July 16, 2019 14:23 ET (18:23 GMT)

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