The moment Christine Lagarde was nominated for the top job at the European Central Bank, she left a gaping hole at the IMF. Afforded the status of a head of state, the fund’s managing director is one of the most coveted jobs in international finance.
The successful candidate will face the challenge of running an international institution dedicated to global economic co-operation at a time of simmering conflicts.
The first question facing potential candidates from the 189 IMF member countries is whether they are sufficiently European. Officially, nationality is irrelevant and the process will be “open, merit-based and transparent”, but all of the 11 heads in the Fund’s 73-year history have stemmed from Europe, following a gentleman’s agreement that handed the management of the World Bank to a US citizen.
David Malpass continued the tradition by securing the World Bank presidency unopposed in April, so Europe has a good chance of keeping its hands on the IMF.
Mark Sobel, a former US Treasury official and IMF board member, said the Trump administration was unlikely to throw up too many hurdles to a European nomination. “With David Malpass having been appointed so easily to the World Bank, it shows that the duopoly is well intact. That means the Europeans can have it if they want it,” he said.
Not all Europeans are equal, however. A French citizen has been managing director for 44 of the 73 years, including the past two post-holders, a fact which will reduce the chances of qualified French candidates such as the ECB’s Benoît Cœuré or Bruno Le Maire, French finance minister.
Currently: governor of the Bank of England
Appointed to lead the UK’s central bank from 2013, Mr Carney is a Canada-born citizen who also holds an Irish passport. He is due to step down from the Bank of England in January 2020.
He started his career in banking at Goldman Sachs before joining the Canadian Department of Finance, eventually rising to become Bank of Canada governor.
Eastern Europeans have missed out on the EU’s top jobs, so Kristalina Georgieva, the World Bank chief executive, would be in a strong position. A highly respected official, she has worked in senior positions in international organisations for the past decade.
Meanwhile, Mark Carney, who holds both Irish and British passports as well as Canadian citizenship, is well regarded by finance ministers and central bank governors and is set to step down as governor of the Bank of England at the end of January.
Mr Carney was immediately seen as a credible candidate in European capitals on Thursday, once they realised his Irish credentials. One senior official in Paris said that “nothing can stop him if he is backed by the Europeans”.
Another possible European candidate is Mario Draghi, outgoing ECB president, but at 71 he is over the maximum age limit for the job and some of those close to him doubt whether he is interested.
Currently: chief executive of the World Bank
Ms Georgieva has been CEO of the World Bank since the beginning of 2017 and served as interim president after Jim Yong Kim unexpectedly resigned in January. She was passed over for the permanent posting in favour of the US candidate David Malpass.
The Bulgarian national has a long history of working at multilaterals, serving in key roles at the European Commission and the United Nations. She first joined the World Bank in 1993 as an environmental economist and has worked for the organisation across Asia and in Russia.
That is in stark contrast to the huge interest from George Osborne, former UK chancellor, who has told friends he is thinking about the job.
Other Europeans who might seek a nomination include Alexander Stubb, former Finnish prime minister and vice-president of the European Investment Bank, and François Villeroy de Galhau, the head of the Banque de France.
If the IMF sticks to its age limits, Klaus Regling, head of the European Stability Mechanism, and Erkki Liikanen, the Finnish former representative to the IMF, would be too old. Bundesbank president Jens Weidmann has been described as “very happy” in his current role.
Jacob Kirkegaard, senior fellow at the Peterson Institute for International Economics, agreed that the US is unlikely to block a European appointment, and might prefer such a candidate to one from an emerging economy, who would probably need Chinese backing.
“It is difficult to see that the US has any material strategic interest here beyond not wanting to aid and abet China’s rise to prominence,” he said.
Currently: general manager of the Bank for International Settlements (BIS)
The Mexican economist served as governor of Mexico’s central bank from 2010 to 2017, when he stepped into his current role at BIS. He also has experience at the IMF, serving as the chair of the Fund’s international monetary and financial committee for two years, and as its deputy managing director for three.
Mr Carstens interned at the Bank of Mexico before earning his graduate degrees, returning to join full time in 1980 and rising through its ranks.
The rules of the contest — which will come into play once Ms Lagarde is confirmed in the ECB job, probably by early autumn and certainly by the European Council in mid-October — require nations to nominate candidates. The IMF’s executive board then whittles them down to a shortlist of three for interviews before making its choice.
In 2011, Agustín Carstens, the Mexican who now heads the Bank for International Settlements, was nominated but could not galvanise support among emerging economies, which are under-represented at the IMF. He would again be a credible candidate.
So would Raghuram Rajan, a former IMF chief economist and governor of the Indian central bank, although his relationship with the Indian government has soured.
If emerging economies want to throw their collective weight behind one person, the notable presence at IMF meetings in recent years has been Tharman Shanmugaratnam, senior minister of Singapore, who served as chair of the IMF’s governing body of finance ministers and central bank governors for three years until 2014.
Currently: senior minister and chairman of the Monetary Authority of Singapore
The Singaporean economist has spent most of his career in public service in the city state. He started at the central bank, which he now heads, before resigning in order to run for office; he was first elected as a member of the Singaporean parliament in 2001. He has in the past served as finance minister, minister of education and deputy prime minister.
He is well known at the IMF, having chaired its policy advisory committee from 2011 to 2014.
Peter Doyle, a former IMF official and longstanding critic of the organisation, said the choice was simple. “No European, no politician, no amateur,” he said, arguing that the next head would have to “deal with the messes” left by the current and former management. “That starts with Argentina, continues with Ukraine and, of course, all the euro problems.”
The IMF has the serious job of seeking to stabilise the global economy. It represents the international community by lending to countries that have temporarily run out of money, imposing strict terms set by the board. It provides early warnings about economic risks and provides technical advice to help countries manage their economies.
The IMF is worried that it could run short of funds as the US is likely to rebuff any bid to seek new capital from member states — a process that would give China a greater say. It has other means of raising temporary funds, but given its recent $56bn loan to Argentina, a global downturn in which many countries come knocking could leave the fund financially compromised.
The successful candidate will therefore need to have the technical ability to understand some of the most arcane parts of global finance and economics, alongside the diplomacy to build consensus among the big beasts of the global economy. That will be a difficult task.