Prime Minister Matteo Renzi,39, has handed in his resignation on Wednesday, hours following the passing of the 2017 budget and three days following his defeat in a constitutional referendum.
He remained in office little more than two years.
On Thursday, President Sergio Matarella will consult with political parties for the formation of a caretaking government. Renzi remains an interim Prime Minister.
Most analysts believe a member of Renzi’s government will be asked to succeed him. That could be either Pier Carlo Padoan, the Finance Minister, or Senate leader Pietro Grasso. The question when are elections to take place.
The technical prerequisite is the harmonization of the electoral law because currently there is a different system for the Senate and a different one for the Chamber of Deputies. Some would argue this could happen within 2017; others argue for 2018.
Those who stand to benefit the most from early elections, according to the polls, is the anti-EU Northern League and the anti-Euro Five Star Movement.
However, no one will benefit if the Italian banking crisis does not remain under control. Currently, at least nine national and regional banks are trying to recapitalize, being burdened with an excruciatingly large portfolio of bad debt. Investors are not likely to welcome political instability. Italy is already moving to nationalize the oldest bank in Europe and third biggest in the country.
Italy is already moving to nationalize the oldest bank in Europe and third biggest in the country, Monte Dei Paschi di Siena. The issue at hand is whether this is a one-off measure or the beginning of many to come.