Merkel declined to be interviewed, the Times said. But Lagarde has commented on their relationship, saying, "There are many circles and many forums where it's only the two of us who are women. So there's a sense of recognition, complicity, solidarity."

The two frequently send text messages to each other, are on a first-name basis, and exchanged gifts during the holidays.

Largarde gave Merkel a "trinket from Hermes" over the holiday season, the Times said. Merkel, in turn, gave Lagarde a Berlin Philharmonic recording.

Their styles, however, are different, as are their policies. Lagarde, the extrovert of the two, favors European nations raising as much as $1 trillion to help debt-burdened European countries.

Merkel, more of an introvert, represents a constituency, Germany, that is demanding other countries get their financial houses in order before they are given any more aid.

Germany believes in fiscal discipline first -- then we'll see. Lagarde, as the leader of an international institution, recently said in a speech in Berlin, "It is not enough to know, we must apply. It is not enough to will, we must do," referring to countries taking more immediate action to shore up the eurozone's finances.

Behind the criticism, however, Lagarde said there was an understanding. "I've been in government and know what securing parliamentary support means," she said. "and equally she appreciates that I speak from a position where I have to think about not only Germany but also the whole of Europe and the stability of the international scene." (UPI)