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Christine Lagarde has stepped down as managing director of the International Monetary Fund, saying she now has more clarity on her nomination to be the next head of the European Central Bank.
Christine Lagarde announced on Tuesday she had submitted her resignation from the global lender, saying she had more clarity about her nomination to be the next head of the European Central Bank (ECB).
"With greater clarity now on the process for my nomination as ECB President and the time it will take, I have made this decision in the best interest of the Fund," Lagarde said in a statement.
Lagarde's resignation comes two weeks after she was nominated to be the first woman president of the European Central Bank on July 2 by the eurozone's 19 member governments. She said her resignation will be effective from September 12.
Lagarde has already given up her day-to-day duties as head of the IMF, and the international lending agency has named a top deputy, David Lipton, as acting managing director.
A former French finance minister, Lagarde was the first woman to head the IMF and was known among policymakers as a tough negotiator. She took over the IMF in 2011 after her predecessor, Dominique Strauss-Kahn, had to step down following sexual assault allegations. Her second five-year term as head of the IMF was not due to end until July 2021.
Another European head?
Lagarde's resignation now opens the way for the international financial institution to look for a replacement. Traditionally, the post has always been held by a European, while the head of the IMF's sister organization, the World Bank, has always been an American since the institutions were created at the end of World War II.
As head of the IMF, Lagarde coordinated large bailout loans for troubled EU nations like Greece, in concert with the ECB and the European Union. She also advocated the benefits of trade, global growth and women's empowerment.
The European Parliament will hold a vote on the next ECB chief, but its outcome is not binding, and Lagarde's appointment will be finalized by EU leaders at a regular summit on October 17-18.
If approved, she would take over as ECB president from Mario Draghi on October 31.
Draghi has pushed the ECB's benchmark interest rate to record lows near zero and has spent €2.6 trillion ($2.91 trillion) on European financial assets in an effort to boost growth and inflation. At the ECB, Lagarde would face the challenge of having to stimulate inflation and growth.
Lagarde's decision to resign comes on the eve of a meeting of the G7 finance ministers in Chantilly, France.
US Treasury Secretary Steven Mnuchin is scheduled to meet with Bank of England Governor Mark Carney — a leading candidate to replace Lagarde — on Wednesday evening on the sidelines of the meeting.
Other names being floated include Bank of Finland Governor Olli Rehn, as well as Germany's Bundesbank President Jens Weidmann, and ECB executive board member Benoit Coeure.
sri/ng (Reuters, AP)