Rodrigo Rato, who led the International Monetary Fund from 2004-2007, was arrested in Madrid on Thursday over charges of tax fraud and money-laundering over his personal wealth.
His was followed at the IMF by Dominique Strauss-Khan.
An influential figure in Spanish banking and politics, he was Spain's finance minister in the conservative government of Prime Minister Jose Maria Aznar and later a leading figure under the ruling conservative government of Mariano Rajoy.
Earlier this week Rato, 66, did not deny reports that he had taken advantage of the Spanish government’s 2012 tax amnesty to declare previously concealed wealth.
The arrest took place after police and customs officials had searched his home.
He was already implicated in a judicial investigation into alleged fraud at the Spanish bank Bankia where he had been a director. The probe was into alleged fraud concerning the 2011 flotation of the bank and the use of secret credit cards by board members. Rato was forced to resign as a result.
The bank eventually went bankrupt and had to be bailed out with €22 billion.
