Following the nomination of Christine Lagarde to head the European Central Bank (ECB), the international leader has announced her resignation as the Director-General of the International Monetary Fund (IMF) come September 12.
“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, as it will expedite the selection process for my successor,” Lagarde said. This scheduled departure has prompted the IMF board to begin the search for her successor.
Pending when the board arrives at a permanent decision, the Fund will be led by Lagarde’s second-in-command, David Lipton. While this decision is laudable, speculation about who will lead the IMF has emerged. By tradition, this position has always been headed by a European while an American heads the World Bank.
The reasons for this long-standing practice is yet to be explained. But the New York Times emphasizes that the IMF proffers financial loans to emerging economies who are struggling with debts. Because of this, when there are suggestions that the fund’s director should come from neither the United States or Europe, these countries who are more dependent on the fund are reluctant to press the issue. Although, there are suggestions the fund’s head should come from emerging/developing countries considering it works closely with them.
It is not certain if the coming appointment will be different but a few objections being raised might call for a change. “I suspect the Europeans are scrambling as we speak to ensure that Europe retains that position,” Tim Adams, the President of the Institute of International Finance, said.
Meanwhile, the 24-member executive board has reacted that the process for selecting the next managing director will be communicated in due time and in a timely fashion.
Possible candidates for the next IMF head include Mohammed al-Erian, an Egyptian American economist; Tharman Shanmugaratnam, the former chairperson of the International Monetary and Financial Committee; Mark Carney, Departing Governor of the Bank of England and George Osborne, British newspaper editor and former Chancellor of British Conservative party.