Italian Referendum a Reform to Enable Further Reform

Italy’s upcoming referendum on constitutional reform is not only “very important,” but also has the potential to catalyze repercussions Europe-wide, according to the chief executive of Italy’s biggest utility.

“If Italy votes ‘yes’ then all of a sudden Europe will say, ‘OK, Italy is indeed progressing on the reform path.’ … Therefore the pressure (may move) to another country that will go into the electoral cycle next,” Enel’s CEO Francesco Starace said on CNBC Conversation.

The baton of change would likely be passed onto France, with this country’s presidential election due to take place in April next year, he added.

Italy’s referendum for constitutional reform is due to take place on December 4, and proposes streamlining the legislative process by decreasing the power of the country’s second chamber, its senate. Italian Prime Minister Matteo Renzi has staked his political reputation on the vote, having vowed to resign if the electorate rejects his proposal.

For Starace, the issue of reducing the senate’s power “needs to be addressed.” He asserted that, “if you reform the senate then the legislative process becomes more nimble and more direct, and therefore other reforms have a better chance to go through without being changed so much that they are basically useless.

“The big deal is that they (Senate) are the largest slowing factor … in the Italian reforming system,” Starace told CNBC. He added that the appetite for change had been part of several preceding governments, but this had been unsuccessful.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza