Who Is Christine Lagarde, and What Is Her Role at the European Central Bank?

Christine Lagarde is a French lawyer and politician who has served as the President of the European Central Bank (ECB) since 2019. She was the first woman to hold the post of finance minister of a G-7 country and is the first female head in the history of the IMF. Forbes named her the second most powerful woman in 2023, and she was also named the 22nd most powerful person in the world in 2018. In February 2022, French President Emmanuel Macron awarded her the Commander of the National Order of Merit insignia.

Early Life and Education

Born January 1, 1956, in Paris, France to two language teachers, Lagarde has several accomplishments to her name and is seen as a trailblazer for women in global finance and policymaking. Lagarde received her education in both the United States and France. She completed her studies in 1974 at the esteemed Holton-Arms preparatory school for girls in Bethesda, Maryland. Following this, she pursued higher education at the University of Paris X-Nanterre's Law School, where she studied and served as a lecturer after earning her degree. She further specialized in labor law, earning a postgraduate diploma (DESS).

She was a member of the French national synchronized swimming team as a teenager and speaks fluent French, English, and Spanish. She holds a law degree from the University of Paris X Nanterre and a master's degree from the Political Science Institute in Aix en Provence.

Notable Contributions

She was Managing Director of the International Monetary Fund (IMF) but relinquished her responsibilities following her nomination for the ECB position. She had held the post since July 5, 2011, and was in her second five-year term.

Lagarde began her career as an associate at the Paris office of Chicago-based law firm Baker McKenzie where she specialized in labor, anti-trust, and mergers and acquisitions. At the age of 31, she achieved the position of partner and broke new ground as the first woman to join the executive committee. Her journey continued as she was appointed chairman of the executive committee in 1999, a role she was reelected to in 2002, leading her to relocate to Chicago.

In 2005, she joined French politics and would remain a government minister for seven years. During this period, she held the posts of trade minister, agriculture and fisheries minister, and finance minister. Lagarde was the finance minister of France during the global financial crisis and impressed world leaders with her judgment and leadership. She played a key role in the organization of the emergency EU bailout fund for banks.

Lagarde replaced Dominique Strauss-Kahn as IMF head after he was accused of sexual assault. She was confronted with the aftermath of the global financial crisis, the eurozone debt crisis, and international trade disputes among other things. She also approved a $56 billion bailout to Argentina, which was the biggest in IMF history, in 2018.

In 2022, Macron presented Lagarde with the Commander of the National Order of Merit for her contributions to France's reputation. This event occurred shortly after Nicolas Sarkozy proposed her as the next Prime Minister should Macron win re-election.

Legacy

Under her leadership, the IMF has argued the rich should be paying higher taxes to reduce inequality, advocated for reforming the global tax system and warned about the macroeconomic effects of a few companies having outsized market power. Lagarde has warned about the danger to the global economy posed by high levels of debt in various countries.

She has also suggested central banks should consider issuing digital currencies in the future for the benefits it offers, like financial inclusion. The IMF became more vocal about climate change under Lagarde.

Lagarde's leadership style is characterized by her political savvy, strong network, and consensus-building abilities, though her lack of formal economics training means she often relies on the experience of the financial technocrats at the central bank.

The Tapie Affair

The Tapie Affair, which is the most significant controversy associated with Christine Lagarde, surfaced when a French court found her guilty of negligence in 2016. This judgment came after she authorized a substantial payment exceeding 400 million euros from public funds to Bernard Tapie, a prominent business magnate and ally of then-Prime Minister Nicolas Sarkozy.

The dispute began when Tapie accused the formerly government-run Crédit Lyonnais bank of undervaluing his controlling share in Adidas during its sale in 1993. A government arbitration panel awarded Tapie a hefty settlement, a decision that Lagarde, then France's Finance Minister, chose not to contest.

Although the court later revoked the settlement, Lagarde was at risk of a year in prison and a fine of €15,000 due to her mishandling of the affair. However, she received no punishment. On July 9, 2019, a Paris court cleared Tapie of related fraud charges.

The Bottom Line

Christine Lagarde has achieved historic milestones, becoming the first female Finance Minister in a G-7 nation and leading the International Monetary Fund (IMF), while currently serving as President of the European Central Bank (ECB). Despite lacking formal training in economics, she has guided both the IMF and ECB through significant global financial crises.

Lagarde's tenure has been marked by her advocacy for gender equality, economic reform, and climate change initiatives. For example, she consistently prefers the title "chairman" over gender-neutral alternatives. She is committed to promoting women within the ECB, and also advocates for providing opportunities to talented women who aspire to leadership roles, highlighting the importance of diversity in the workplace. While her career has not been without controversies, Lagarde is recognized as a key figure in the global financial sector.