The last thing the European Union needs is another banking crisis, especially after the Brexit vote this last June causing markets to temporarily fall and the Greek bailout referendum last year in July. On Sunday, Italy will hold its own referendum on approving reforms to the country’s constitution. However, many view this referendum as a sort of vote for the current prime minister and government. Prime Minister Matteo Renzi stated that he would resign if the outcome was not in his favor, which is similar to when David Cameron resigned from office after the results of the Brexit referendum. This makes sense though; if the citizens of Italy are not content with the job their current prime minister is doing, it only seems right that PM Renzi steps down from his position. It is expected that voters will indeed vote “no,” meaning that Renzi will have to resign, unless he goes back on his promise. If voters say “no” to the reforms, there is sure to be both political and financial instability in the country. For the third largest country in the eurozone to have economic instability is not a very good sign for the eurozone, or even Europe, as a whole.
While all this analysis and speculation is going on about how next Sunday’s results will play out, Italian officials are choosing to downplay the whole situation. They are not saying how bad the potential instability will impact the domestic and European banks, which could be dangerous for the government if the effects do turn out badly and the citizens become angrier than they are.