Lagarde resigns as IMF chief in advance of ECB post

WASHINGTON - International Monetary Fund chief Christine Lagarde submitted her resignation from the global crisis lender on Tuesday, signaling her likely approval by the European Parliament to head the European Central Bank, or ECB.

Lagarde said in a statement her resignation was effective on Sept 12, firing the starting gun for the IMF's search for her successor, which is likely to be another European.

"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.

IMF succession is expected to be a major topic of discussion among G7 finance ministers and central bank governors meeting on Wednesday and Thursday in Chantilly, France, amid concerns that slowing global growth and trade conflicts will pressure vulnerable economies.

Lagarde's resignation came two weeks after her nomination on July 2 for the ECB's top job. She did not immediately quit the IMF because of uncertainty over whether the new European Parliament would support her and other new EU leadership positions, sources told Reuters.

Her nomination was part of a package of top officials agreed to by EU governments that included German Defense Minister Ursula von der Leyen as European Commission president.

Later on Tuesday, von der Leyen was approved by the European Parliament in a 383-327 vote.

The European Parliament will hold a nonbinding vote on Lagarde's appointment, which is expected to be finalized by EU leaders at a regular summit on Oct 17-18.

A former French finance minister, Lagarde was the first woman to head the IMF and was known among policymakers as a tough negotiator. She was a tireless advocate for the benefits of trade, global growth that aids the poor and middle classes, and the empowerment of women.

If approved, Lagarde would take over as ECB president from Mario Draghi on Oct 31. While her confirmation could be lengthy, it is likely to be largely a formality as long as the eurozone's biggest member states - Germany, France and Italy - are in unity.

Her immediate challenge at the ECB will be to overcome her shortcomings in monetary policy-making, especially as it seeks to rearm for a potential new slump after years of using unconventional policy tools to stimulate inflation and growth.

As head of the IMF, she has had some battle-testing, bringing stability to the eurozone debt crisis of the last decade and presiding over large bailouts for Argentina, Egypt and Ukraine. She has emphasized the need for the IMF to maintain its $1 trillion in lending firepower to deal with any future crises.

Reuters

(China Daily 07/18/2019 page12)