Although she is not an economist, she has gained respect as the French finance head during its leadership of the G-20 group of countries, as well as during European debt talks.
Lagarde toured the world to convince emerging economic powers, such as China and India, that she would take tough stances on European bailouts and would not be biased against their interests.
"I am not here to represent the interest of any given region of the world, but rather the entire membership," she told the IMF board last week.
Nevertheless, there had been grumblings from non-European members about the continent's 65-year lock on the managing director's job. Carsten was not able to gain broad support despite his impeccable credentials: a PhD in economics from Chicago University and stints as both finance minister and governor of the central bank of Mexico.
Under an informal arrangement in place since World War II, the IMF is always headed by a European citizen, while its sister organisation, the World Bank, is headed by an American. The US also names the IMF's top deputy.