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(“Let the consuls see to it that the state suffers no harm”) These are the first words from the phrase with which the Roman senate gave the consuls dictatorial power at critical moments for the country. As of 4th December Italy will need its consuls once again, as the country is about to enter into a political crisis, at a time when there is desperate need to have a government in place. Italy is a democratic parliamentary republic with a multi-party system under the Constitution, in force since January 1st, 1948. The main legislative body in Italy is a bi-cameral parliament with some limited legislative powers also held by the Council of Ministers. Every law must obtain the approval of both chambers – the Chamber of Deputies, comprised of 630
This morning, as Italians go to the polls to vote in a constitutional referendum, European TV channels broadcast a special programme going to the root of the referendum – Italy’s banking crisis. A series of senior bankers, chairmen and chief executives expressed their views. None were optimistic. The head of Societe Generale in Italy offered the view that there is no point recapitalising banks who have no realistic hope of making any profits. Another said effectively that non-performing loans (NPLs) were bad, but the threats facing Italian banks from non bank lenders and technological developments were much worse. Yet a third conceded that Italy should have copied Spain and applied for a bailout from the European Stability Mechanism (unfunded bailout fund). Then the young interviewer met with Prime
One of the benefits to European policymakers of Brexit is that it has dominated news coverage for months, diverting attention from several indicators that the banking crisis in Europe is inexorably worsening. When Italy announced, a few days after the Brexit vote, that it was preparing a €40 bn government recapitalisation of its banking system, Rahm Emanuel’s observation, “You never let a serious crisis go to waste” sprung to mind. Prime Minister Renzi’s proposal was notable because it contravenes the EU’s banking union rules obliging all creditors, including unguaranteed depositors, to be ‘bailed in’ before the question of public funds is supposed to arise. It is difficult to see a connection between the UK’s declaration of preference for self-government and the dramatic drops in bank share prices on