Referendums may turn out to be catchy in Europe. Less than two weeks after Britons voted on whether or not to leave the EU, a referendum in another major EU country may be coming up.
According to Italian Prime Minister Matteo Renzi ,the long overdue reform of Italy's constitutional reform package could end decades of the country’s revolving door governments and Italians may be able to vote on the outcome as early as October.
Italian analysts are concerned that the October vote could turn into a referendum on the Italian government itself and could prove to ricochet against Renzi, who has been prime minister for 2 1/2 years.
Bank Reforms Needed
Any reform measures discussed in Italy will have to consider the poor state of the Italian banking institutions which are burdened by $400 billion in bad loans, one-third the eurozone total. These problems existed long before Renzi's center-left government came to power, but they became a more dramatic issue after thousands of small depositors were wiped out at four regional banks over the last year and several savers who lost all their money committed suicide.
One public opinion poll said that 34 percent of Italians would vote against Renzi’s plan, with 28.9 percent in favor, 19.4 percent undecided on which way to vote and 17.7 percent undecided on whether to vote.
The possibility of an October referendum has investors and Italian bond holders concerned. At 1.25 percent, yields on Italy’s 10-year benchmark bonds were nine basis points higher than Spain’s on Monday after the spread widened to 11 points on June 29.