The nomination of Lagarde to head the European Central Bank enters the IMF in an early race to succeed it

Editorial date: 2019/7/3 19:15

The International Monetary Fund’s nomination of Christine Lagarde to head the European Central Bank (ECB) prompted the International Monetary Fund (IMF) to launch an early and unexpected search for a new fund manager amid a raging trade war that has dimmed prospects for global growth.

Lagarde said in a brief statement that she had “honored” the nomination and would temporarily relinquish her position as IMF general manager during her nomination.

Lagarde’s appointment depends on the approval of the fractious European Parliament. If approved, Lagarde will assume her post as president of the European Central Bank (ECB), replacing Mario Draghi as of October 31.

Lagarde’s second five-year term expires as IMF director in July 2021. Last September, the Financial Times asked Lagarde whether she was interested in chairing the ECB, saying “no and no no”.

The Board of Directors of the International Monetary Fund said in a statement that it accepted Lagarde’s decision to step down temporarily, and appointed First Deputy Managing Director David Lipton as acting director, expressing “full confidence” in the US economist.

The Board’s statement did not contain any details about the search for who would succeed Lagarde in managing the fund.

But in Washington, speculations about potential candidates to succeed Lagarde were already focused on European figures including Olli Rehn, governor of the Central Bank of Finland, François Villeroy de Gallau, governor of the French central bank, and Vince Boehderman, president of the Central Bank of Germany.

Some analysts also point out that Draghi, who will complete his 72nd year before leaving the ECB, could be a potential candidate for the IMF presidency in a swap with Lagarde, 63.

The IMF director is usually European, while the director of the sister institution is the World Bank, which was also established at the end of World War II, and at times, large emerging markets sought to break this double monopoly and advance its candidates.

But Mark Sobel, an American and former executive director of the International Monetary Fund, said he saw no possibility of change this time, especially after David Malpas, the US president’s nominee Donald Trump, was elected president without difficulties in April.

He Sobel “bilateral monopoly exists.

” Did not oppose the Europeans Malpas because they cling led by the International Monetary Fund, the United States would not oppose its choice Europeans to the Fund. ” The

United States has strongly vote rate of 16.5% in the IMF, and then have the right of veto (veto ) On IFAD’s decisions.

But Heather Connelly, vice president for Europe and Eurasia at the Center for Strategic and International Studies in Washington, believes that given Europe’s diminished impact on the global economy, it may eventually have to give up the leadership of the International Monetary Fund.

US Treasury Secretary Stephen Menuchin blocked the study of the reallocation of quotas at the International Monetary Fund (IMF), which would have increased funding and given bigger powers to emerging markets such as China, Brazil and India.

With Lagarde’s departure, the IMF will lose a tireless advocate of the benefits of trade and global growth that supports the poor and middle classes and the empowerment of women.

Lagarde spent most of the year warning against slowing world growth caused by the US-China fee war, which the IMF estimates will cut global economic output by about 0.5 percent.

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