The International Monetary Fund's board cleared Managing Director Dominique Strauss-Kahn of harassment, favouritism and abuse of power following an inquiry into his affair with a subordinate.
"The executive board noted that the incident was regrettable and reflected a serious error of judgment on the part of the managing director," the IMF's board of member countries said in a statement.
The investigation found that Mr Strauss-Kahn's brief affair with Piroska Nagy, who worked in the IMF's Africa department as a senior economist until taking a buyout in August, had been consensual.
In a statement to accompany the IMF board's findings on Saturday, Mr Strauss-Kahn again apologised for his actions.
"I very much regret this incident and I accept responsibility for it," he said.
"I have apologised for it to the board, to the staff of the IMF and to my family. I would also like to reiterate my apology to the staff member concerned for the distress this process has caused."