On Path to ECB, Lagarde Resigns as IMF's Chief
July 16 2019 - 5:59PM
Dow Jones News
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, the top IMF job has always gone to a candidate selected
by European governments, part of an informal arrangement in which
Americans 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 candidate to succeed Ms. Lagarde at the IMF, two European
officials said. The discussions will take place on the sidelines of
the 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.
Former Dutch finance minister Jeroen Dijsselbloem, formerly
chair of the Eurogroup -- a collective of euro area finance
ministers -- has emerged as one of the front-runners to succeed Ms.
Lagarde at the IMF, according to one European official familiar
with the discussion. However, the official noted that there still
was opposition to Mr. Dijsselbloem from southern members of the
eurozone due residual animosity against the Dutch politician who
was known for his hard line stance on austerity during the euro
crisis.
A number of other 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 didn't rule out considering
the top IMF job.
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 17:44 ET (21:44 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.