Italian Prime Minister Matteo Renzi’s big defeat in a referendum poll over his reforms of the constitution, which saw 60% of the people opting for a “no”, led to a big fall in the euro after the exit polls.
According to the Telegraph, the euro fell to a 20-month low against the dollar at $1.0505 after opening at around $1.0685, but later pulled back up to $1.0562.
On Sunday, Dec. 4, 2016, a constitutional referendum was held in Italy, where the citizens were asked whether they agreed to and approved a constitutional law that amended the Italian Constitution to reform the composition and powers of the Parliament of Italy, along with the division of powers within the state, the regions and administrative entities.
This poll gifted Renzi a huge defeat that led to his resignation as the country’s prime minister. In a midnight press conference where he announced his resignation he said, “My experience in government ends here… I did all I could to bring this to victory.”
The bill was strongly criticized by the opposition parties as they felt that it was poorly written, which was in turn making the government powerful.
Shares of Italian banks fell after the referendum as they were expecting a rescue package from the EU. Shares in Banca Monte dei Paschi di Siena, the world’s oldest bank, fell at a steep rate, The Guardian reported.
Italy, which is the fourth largest economy in Europe, will witness more political instability (it has a history of unstable governments) and a tumbling Europe and unstable banking stock scenario does not bode well for the coming days.This
There is a possibility of early general elections next year in the country. Fears are that Italy will follow the populist route of Brexit and the US elections with the populist parties such as the Five Star Movement and the Northern League who are calling for an early vote and a “new era” in European politics, pushing for an exit of Italy from the eurozone.
The current referendum is the third constitutional referendum in the Italian Republic history; the other two were done in the years 2001 and 2006 respectively.