A French court is to investigate new IMF chief Christine Lagarde for abuse of authority when she was French finance minister.The court made the decision after meeting for several hours to discuss a preliminary inquiry.
Ms Lagarde denies misconduct. There is no suggestion she profited personally.
Correspondents say the move is embarrassing for Ms Lagarde, who has been in the job for one month, but no indication of her guilt or otherwise.
Ms Lagarde took over as managing director from Dominique Strauss-Kahn in July, following his arrest in May on charges of the attempted rape of a New York hotel maid.
Prosecutors say Ms Lagarde abused her authority by approving a 285m-euro ($406m) payment to businessman Bernard Tapie, a former left-wing minister who switched sides to support Nicolas Sarkozy in the 2007 presidential election.
At the time Mr Tapie was in the midst of a court battle with the former state-owned bank Credit Lyonnais. He alleged the bank had defrauded him in the 1990s, when he sold a stake in the sports clothing business Adidas.The businessman had lost the case in the country's highest court but was appealing against the decision.