Italy goes to the polls with its banking system on cliff's edge

Italy goes to the polls with its banking system on cliff's edge

"Already crushed post-Trump, the euro could hit parity with the dollar if Renzi loses as Italy's place in the eurozone could be doubt", Wilson predicted.

"Italy is an essential part of Europe, should we lose it as Europe's architect, inspirer and artisan, it would not be the same", he said.

A key Italian bank gauge veered toward a three-month low on Monday, reflecting fears that a potential rejection of proposed constitutional reforms in a December 4 referendum could unleash political and economic uncertainty.

Tensions between Italian Prime Minister Matteo Renzi and the European Union have reached a boiling point ahead of Sunday's referendum on constitutional reform. "In this way, Italy will remain a system that favors instability and backdoor dealings".

Head of the ECB Mario Draghi tried to enforce calm on Monday, and said Italy's debt pile is large but sustainable.

If he were to lose by a respectable margin - say by 45-55 or 47-53 percent - he could still claim to represent nearly half of the country and could capitalise on that result to consolidate his grip on the PD and prepare for the next general elections, due by 2018 at the latest. If this referendum fails, Italy will bear the brunt of the repercussions.

"Our central case scenario is that, even after a "no" vote, Mr Renzi stays as Prime Minister".

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Renzi says the project is necessary to make Italy, which has had 63 governments since 1948, governable enough to enact reforms needed to revive its moribund economy. Other metals were also ended trading higher giving a boost to the broader mining sector.

People have demanded Renzi's resignation and called the reform "disgusting".

"All those uncertainties related to the Italian referendum still exist".

Opinion polls found however that the opposition vote was comfortably in the lead. "We're surrounded by an oppressive bureaucracy", said the prime minister. Given the huge premium accorded to the victor by Italy's new electoral law (Renzi was sure he would be the one to benefit), such a prospect is truly frightening.

Moreover, opinion polls show that the Five Star Movement's popularity is close to that of the Democratic Party, giving it incentive to avoid early elections that could unseat it. And there does not seem to be anyone within the party ready to step in as PD leader. For example, it could eliminate the two-round system outlined in the law. This prospect might impel the government to change the rules while it still can. They said that it would give too much power to the governing party and would undermine democracy. Italian banks have a big sovereign debt exposure. With 5-Star polling at about 30%, it has a chance at leading a new government. And so, one way or another, Italy may face elections in 2017, as will France and Germany. Add to that rising Euroskepticism, and the result is an intoxicating political brew.

"Expect to see further choppiness until at least Wednesday, unless OPEC's next move becomes clear one way or another before the actual meeting", he added.

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