Italians on Sunday are casting their ballots in a crucial constitutional referendum that could drastically change the political landscape of the eurozone’s third-largest economy.
Center-left reformist Prime Minister Matteo Renzi has called for changes to the constitution, drafted in 1948, with the promise of stimulating Italy’s sluggish economy and streamlining the country’s legislature.
The changes would weaken the upper house of the Italian Parliament, the Senato, by cutting its numbers from 315 to 100.
Proponents of the referendum say that the goal is to make the job of governing Italy less complicated.
But critics say the changes would also abolish an important check on the lower house’s power.
What’s really at stake?
Renzi has vowed to resign if the referendum isn’t passed, and for many Italians the ballot has become something of a vote of confidence in the leader.
Renzi’s high-risk pledge has led to speculation of an ensuing general election and possible win by the anti-establishment Five Star Movement (M5S) party, led by comedian Beppe Grillo.
The referendum vote also comes amid fears of a wave of populism spreading across Europe.
What does it mean for the banks?
There are also fears a “no” vote could further shake up the country’s financial stability, considering that its banks are already downing in bad debt.
Investors, fearful of the political turmoil, could demand a much higher price for providing the money some banks urgently need.
A few banks might then be unable to pay that price or find willing backers, leaving them in need of a state bailout.