Christine Lagarde was speaking during an event at the World Economic Forum
The head of the International Monetary Fund thinks that the migration crisis has pushed Europe to a "make or break" point.
Christine Lagarde says it has also endangered the Schengen agreement - which allows passport-free travel in parts of the EU.
She was speaking during an event at the World Economic Forum (WEF) in the Swiss ski resort of Davos.
Ms Lagarde earlier this week announced her intention to run for a second term as IMF boss.
The migration and refugee crisis has been one of the major talking points at the WEF this week.
The Dutch and Swedish prime ministers told WEF audiences that Europe has just six to eight weeks to save the 26-nation Schengen zone from collapse.
Austria has announced more border controls this week and German President Joachim Gauck told the Davos audience there would be nothing immoral about putting a limit on the number of asylum seekers a country could absorb.
Meanwhile, French Prime Minister Manuel Valls warned that Europe's migration crisis is putting the European Union (EU) at grave risk.
More than a million migrants and refugees crossed into Europe in 2015, according to the International Organisation for Migration (IOM).
The organisation estimates that some 31,000 migrants have reached Greece by sea so far this year, hoping to start new lives in Europe.
Dozens of people drowned yesterday after their boats capsized off the Greek coast during their attempt to reach Europe.