in a statement earlier on Tuesday, IMF Managing Director Christine Lagarde said that she would step down as head of the financial institution during the nomination process, in order to become president of the European Central Bank (ECB).

The IMF board announced on Tuesday that First Deputy Managing Director David Lipton will serve as interim leader of the International Monetary Fund (IMF), replacing Lagarde.

"We accept Ms. Lagarde's decision to relinquish her IMF responsibilities temporarily during the nomination period [...] We have full confidence in First Deputy Managing Director David Lipton as Acting Managing Director of the IMF", the board said in a statement.

EU leaders announced on Tuesday, after days of wrangling, their picks to head key EU institutions.

Lagarde was proposed as a candidate for president of the European Central Bank. Her nomination needs support from the European Parliament and the ECB's Governing Council.

Lagarde's nomination means that she would step down two years before the end of her second five-year term at the helm of the IMF.

“I am honored to have been nominated for the Presidency of the European Central Bank. In light of this, and in consultation with the Ethics Committee of the IMF Executive Board, I have decided to temporarily relinquish my responsibilities as Managing Director of the IMF during the nomination period”, Lagarde said earlier in a statement.

The IMF was established in December 1945, when 29 founding member countries signed the Articles of Agreement.

The IMF currently comprises 189 member states. In order to maintain stability and prevent crises in the international monetary and financial system, the IMF monitors national economic policies and economic and financial changes. The fund makes recommendations to member states and regularly evaluates global prospects by means of publications and reports.

The IMF also provides financial support to members by developing joint programs to stabilize the economy.

The IMF’s financial resources mainly consist of the contributions of member quotas to the fund. The size of a quota depends on the size of the country’s economy. The amount of money a country can obtain from the IMF, its 'access limit', is based on its quota. The IMF’s highest decision-making body is the Board of Governors, which consists of one governor and one alternate governor for each member state.

The Board of Governors meets once a year at annual meetings of the IMF and the World Bank.

The IMF’s 24-member Executive Board, which represents all member countries, oversees the fund’s daily work at its headquarters in Washington DC.