_Mr Lipsky was appointed under the George W. Bush Administration.
_Two Days Ago Lipsky said he was going to Step Down
_Mr Lipsky's announcement comes ahead of what many IMF watchers say is also an expected early departure of managing director Dominique Strauss-Kahn
_Although he has declined to say whether he'll run as a candidate in the French presidential elections, a raft of polls have him sitting ahead of other candidates, including incumbent Nicolas Sarkozy.
May 13, 2011
IMF deputy managing director John Lipsky to step down
JOHN Lipsky, the International Monetary Fund's No. 2 official, said today he will step down after his term expires at the end of August.
The unexpected move by the fund's first deputy managing director re-opens the controversial question of IMF governance and the institution maintaining its legitimacy in a new world of burgeoning emerging market economies.
"It will be interesting to see if the US gives up its prerogative to appoint the No. 2 official," said Eswar Prasad, A Cornell University economist and former senior IMF official.
Technically, the IMF's managing director selects and appoints the person to fill the position, in consultation with the executive board.
But the position has historically been appointed by Washington, as part of an agreement with the Europeans.
While Europe has installed a European as head of the IMF and the US appointed the head of the World Bank,
Washington also won appointment of the No. 2 official at the fund to help guide management there with American input.
Mr Lipsky was appointed under the George W. Bush Administration. The two prior first deputy managing directors, Stanley Fisher and Anne Krueger, were also Americans.
The key question is whether the US has another American candidate it wants to support, or if it will use this as an opportunity to push through the governance restructuring in the IMF the US Treasury says it has been championing by allowing a non-American to fill the spot.
A Treasury spokeswoman declined to immediately comment.
Emerging countries that have gained significant economic clout in recent years, such as China, India and Brazil, have complained they haven't seen a commensurate rise in standing at international financial institutions.
A restructuring of the membership and voting shares within the IMF, a move partly facilitated by Washington, helped to ease some of those tensions.
But US and European leaders haven't decided whether to continue that governance restructuring into the appointments of the top officials at the World Bank and the fund, however.
Mr Lipsky's announcement comes ahead of what many IMF watchers say is also an expected early departure of managing director Dominique Strauss-Kahn.
Although he has declined to say whether he'll run as a candidate in the French presidential elections, a raft of polls have him sitting ahead of other candidates, including incumbent Nicolas Sarkozy.
Mr Strauss-Kahn has indicated that he's made a decision, however, that he will announce in July, a date that coincides with the deadline for him to submit his candidacy, analysts say.
That has stirred discussions of who will replace Mr Strauss-Kahn, or rather, where he or she will hail from: another western European country or an emerging market nation?
"It's going to be very difficult for the US, given that it has been pushing very hard for governance changes at the top at the same time it should maintain the number two position," Mr Prasad said.
"If they insist on keeping that position, it becomes harder to dislodge Europe from the top."
Mr Strauss-Kahn called Mr Lipsky "a tireless thinker" and "an influential proponent of multilateralism and deeper financial surveillance" in a statement.
"I have greatly valued his remarkable commitment to the institution and his role as my deputy," Mr Strauss-Kahn said.
Mr Lipsky originally joined the IMF in 1974, serving for 10 years before leaving to join the private sector. He rejoined the fund in 2006 from JP Morgan, where he had been serving as vice-chairman.
"I am confident that the institution is well positioned to handle the challenges that lie ahead. I look forward to maintaining strong relations with the IMF in the future," Mr Lipsky said in a statement.
The IMF said Mr Lipsky has agreed to serve as a special adviser to the IMF through the Group of 20 summit in November.
In the meantime, the IMF said the process of finding someone to replace Mr Lipsky is under way, and Mr Strauss-Kahn has notified the board "a successor to Mr Lipsky will be named in due course".
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