The Italians voted against the referendum to change the Constitution proposed by Matteo Renzi, the immediate consequence of this popular vote is the resignation of the Prime Minister, as he promised in the campaign. The result of the referendum may trigger a serious political crisis in Italy with major implications for the EU economy. In this situation, many people wondered if the country will exit the eurozone.
There is also a word that describes the scenario: Quitaly. Will the monetary union collapse? This referendum would trigger a domino effect throughout the European Union, as some experts believe?
The Independent shows 5 reasons Italy will not leave the eurozone. Despite the negative vote for constitutional changes, it should not be seen as a vote against the European project.
1. Most likely, the Italian President will appoint an interim government
In Italy, there are some fears that anti-euro party Five Star Movement led by comedian Beppe Grillo, will come to power.
But Renzi’s resignation would not necessarily mean early elections. President Sergio Mattarella has the option to appoint an Interim Executive and Cabinet does not suffer major changes.
Moreover, it is rumored that the new prime minister would be even who currently occupies the chair of Finance, Pier Carlo Padoan. And if that happens, then it will ensure continuity, so no rupture and suffered an earthquake on the political scene.
In addition, the new government could remain in power until 2018, when new elections are scheduled, and until then the wave of popularity that was “perched” Five Star Movement lately might break the shore.
2. The electoral law
Renzi wanted to reform the structure of the Italian legislature, and one of the measures proposed by him paved the way for the country’s largest party can govern alone, without being forced to do any coalition.
The Five Star Movement – who is currently in second place in the preferences of voters – could take power in Italy without any problems if elections will be held this year.
Only the measure has not been adopted and is currently on the table of the Italian Constitutional Court, which must give a verdict. In addition, the interim government – if he is appointed president – could give implement this change, so Italy will return to the status quo.
3. The Five Star Movement can not hold too easy a referendum on euro membership.
Italy’s constitution does not allow a referendum on issues of international treaties, including a ban which applies a voting on euro membership.
So if Five Star Movement will come to power, it must first hold a referendum to change the constitution and then another one in which Italians what to ask them whether they want to use the euro or to return to the lira.
4. Most of the Italians are happy with the euro
And even if, Five Star Movement would be able to go through all these steps, the idea is that most of the population is pro-euro.
Moreover, we all know what happened in Greece, in the days when the country was sinking into debt and called for international help – investors have pulled money out there, and the population has withdrawn savings from banks. And the Italians would not want that to happen and them, especially as not doing as well as before and the economy is barely keeping afloat, while many banks are adrift.
5. European Central Bank (ECB) will do everything possible to avoid the outbreak of a new financial crisis
The recent crisis in Italy ended in 2012 when the ECB agreed to buy back the debt of the country, a movement without which the country would have gone into bankruptcy because otherwise, it was very difficult to borrow from international markets over a long period of time.
So if the situation will deteriorate again, most likely the ECB will once again enter the scene.