It may not be widely known, but the International Monetary Fund (IMF) has always been headed by a European, and the World Bank by a US citizen. This is the unwritten convention, or gentlemen’s agreement, that has held since these twin global financial institutions were established in the aftermath of the second world war.

Yet those with an interest in how, and for whom, the global economy is run have long been deeply unhappy about this cosy arrangement. And these concerns have once again been brought into sharp focus after Christine Lagarde, the IMF managing director, announced she is stepping down next month.

An all-European shortlist was once again drawn up by the EU. But the European establishment has struggled to agree on who it wants to fill the role ahead of a 6 September deadline for nominations, with the Bulgarian Kristalina Georgieva chosen to be the EU’s nominee after a divisive round of voting on Friday.

“The truth is that there is no readily available tried-and-tested European all-rounder,” a European minister told CNBC.

Surely, with a final decision on Lagarde’s successor expected on 4 October, now is the moment for such regressive and anti-democratic leadership conventions to be scrapped. In April I chaired a discussion inside the World Bank in New York among 200 civil society leaders, and explicitly questioned the World Bank’s executive directors, arguing that it was “unbelievable that the recruitment and appointment to the [leadership of the] bank came from one single nation”.

This governance issue is about so much more than mere cosmetics. As the world becomes ever-more politically polarised and vulnerable to populist leadership, and as the US administration turns away from multilateralism and takes a sceptical approach on the climate crisis, there is all the more reason for these major institutions – which are so keen to boast of their globalist credentials – to take an inclusive, merit-based approach to what ought to be a diversified recruitment process. The coming window for new leadership is an opportunity for the IMF to demonstrate a different model that is democratic and – crucially – inclusive of candidates from the global south.

It simply cannot be right that the leadership of the institutions with the greatest power to tackle the climate crisis excludes applicants from those countries where that crisis is wiping out the lives and livelihoods of many millions of people. The IMF aims to create sustainable growth and to reduce poverty in the world. How can it do so when it is run on fundamentally undemocratic principles?

It is time for all members of the IMF to stand together and vote against a model that mocks the principles and values that the same countries place above all else. The hypocrisy and double standards are damaging world peace and development progress. It is time to see leaders who have the courage and boldness to evidence the values they champion. The most vulnerable people in our communities are paying a huge price for weak leadership that serves the interest of the few in the name of the rest.

‘The most vulnerable people in our communities are paying a huge price for weak leadership that serves the interest of the few in the name of the rest.’ Children in Kiribati, now under threat from rising sea levels. Photograph: Jonas Gratzer/LightRocket via Getty Images

And this is not just a question of figureheads. It goes to the heart of inherent deficiencies with these institutions. The growth-focused narratives at the IMF and the World Bank are simply not working for the world’s poorest and most marginalised. Instead they drive ever greater destruction of the natural systems on which we all rely, and ever greater global concentration of wealth and power. What is desperately needed are ways of reorganising the economy around principles of sustainability to keep within our boundaries of a single shared planet, and create democratically owned economic systems that will meet the needs of everyone, without giving way to the greed of the very few.

Gentlemen’s agreements have no place in a world of diverse economies, communities, peoples, races and nations. They are not fit for purpose in a global institution of 189 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world.

The IMF, like the World Bank, needs to modernise, or it is in danger of outliving its usefulness to the world. Now must be the time to act. We need global institutions that are fit for where we are going and not for where we have come from. Let us safeguard the future with the right values and actions.

• Amanda Khozi Mukwashi is chief executive of Christian Aid