The European Union said on Friday that it will install a new managing director for the International Monetary Fund (IMF), excluding the possibility for a non-European to succeed outgoing Spaniard Rato.

"We hope that the EU will identify a suitable successor candidate in due time so as to ensure the important reform process that has been started at the IMF will be taken to a good port and at a good time," said Amelia Torres, spokeswoman for European Economic and Monetary Affairs Commissioner Joaquin Almunia.

The IMF current managing director Rato announced Thursday he would step down in October for personal reasons, ending his five-year term two years earlier.

"My family circumstances and responsibilities, particularly with regard to the education of my children, are the reason for relinquishing earlier than expected my responsibilities at the Fund," he said.

Rato's surprise resignation gave the IMF four months to search for a new leader.

As a usual practice, a European should lead the Fund, while an American takes charge of the World Bank, since the United States and Europe are the two biggest contributors to both financial institutions.

But the two sister bodies were under pressure to give more say to other members and developing countries, including the choice of their respective leaders.

International development groups and NGOs were calling European countries to scrap the outdated rules and give up their privileges.

"European countries are now being given a second chance to lead the reform of international financial institutions," said Peter Chowla, policy and advocacy officer at the Bretton Woods Project, "they just missed a historic opportunity with the resignation of Paul Wolfowitz at the World Bank."

Despite heated debate over the successor to Wolfowitz, who was forced to step down for his promotion of his girlfriend, the World Bank earlier this week unanimously approved former U.S. deputy secretary of state Robert Zoellick as its president.

European countries "can atone by ensuring that the next IMF managing director is selected through an open, transparent and inclusive process, where selection is based on merit not nationality, and where the views of all members have equal weight," Chowla said.