TOPICS > Economy

Lagarde Takes Helm of IMF in Time of Global Economic Uncertainty

July 28, 2011 at 12:00 AM EDT

JUDY WOODRUFF: And to our interview with the new head of the International Monetary Fund about the U.S. debt battle and its potential impact around the globe.

Margaret Warner begins with some background.

MARGARET WARNER: On May 14, the worlds of global finance and one of its stewards, the International Monetary Fund, were rocked by the arrest of IMF Managing Director Dominique Strauss-Kahn on sexual assault charges in New York City. Days later, he resigned the post he’d held for four years, touching off a battle to replace him.

The victor, elected by IMF members on June 28, French Finance Minister Christine Lagarde, she’s the first woman to head the IMF, for 65 years a pillar of international development and financial stability.

She takes the helm as that stability is sorely threatened. Three European countries, Greece, Portugal and Ireland, are mired in sovereign debt crises. The IMF has already contributed to bailouts of all three. Two larger, debt-laden European economies, Spain and Italy, are struggling to avoid needing bailouts as well.

Late last week, the Eurozone’s leaders approved a second, $157 billion rescue package for Greece, which, for the first time, forced private investors in Greek debt to accept some losses — added to that volatile mix, a political crisis in Washington that threatens to devalue U.S. Treasury debt, the backbone of world finance.