Christine Lagarde resigned as managing director of the International Monetary Fund, according to the lender.
In light of her nomination as the next European Central Bank's president, Ms. Lagarde will be leaving the IMF on Sept.12, the fund said.
"With greater clarity now on the process for my nomination as ECB's president and the time it will take, I have made this decision in the best interest of the fund, as it will expedite the selection process for my successor," Ms. Lagarde's said in a statement published Tuesday on IMF's website.
Ms. Lagarde's second term at the head of the IMF was scheduled to expire in 2021.
"The executive board will now be taking the necessary steps to move forward with the process for selecting a new managing director," Ms. Lagarde said. Among candidates is current Bank of England chief Mark Carney.
In the interim, David Lipton will remain as IMF's acting managing director, a role he assumed July 3 with Ms. Lagarde's ECB nomination.
France's Ms. Lagarde was nominated by the European leaders as part of a political package alongside Germany's Ursula von der Leyen as president of the European Commission, Europe's governing body. Ms. von der Leyen narrowly secured approval from the European Parliament on Tuesday.
To be elected as ECB's president, Ms. Lagarde's also needs a green light from the European Parliament, and her appointment must be seconded by the ECB's governing council, which consists of eurozone central bank heads.
Money managers say Ms. Lagarde should stay with the program endorsed by Mr. Draghi, maintaining the ECB's accommodative stance despite low inflation. While criticized for having little monetary policy experience, Ms. Lagarde's nomination excited investors, who agree Europe will require a fiscal stimulus during the next downturn.
"(The) Lagarde and von der Leyen appointments will help Europe respond constructively to potential crisis, with fiscal and monetary policy acting in greater unison," said Andrew Bosomworth, head of portfolio management for Germany at Pacific Investment Management Co., in an emailed comment.
The ECB will be challenged in the next recession by already low interest rates and the ineffectiveness of its policy tools, Mr. Bosomworth said. "Europe's delayed demographic resemblance to Japan, where monetary policy prioritizes avoiding deflation over crushing inflation, suggests that the ECB's fiscal perspective will most likely result in the central bank continuing to support member states' government bond issuance through asset purchases."
The governing council of the ECB next meets July 25.
