Matteo Renzi has tendered his resignation as Italian Prime Minister following a weekend referendum in which Italians resoundingly rejected his proposed constitutional reforms.
Mr Renzi tendered his resignation to President Sergio Mattarella, who said he would consult with the political parties to decide the next steps. He asked Mr Renzi to carry on in a caretaker capacity until a solution is found.
After the consultations, which will begin tomorrow evening and end on Saturday afternoon, Mr Mattarella is widely expected to ask a member of Mr Renzi's cabinet, or a politician from his Democratic Party, to try to form a new government.
Elections are due in 2018 but many politicians are calling for them to be held earlier.
The political crisis sparked by the referendum coincides with a crisis in Italy's debt-laden banks, especially at its third-biggest lender Monte dei Paschi di Siena, which looks likely to require government intervention to survive.
Two sources told Reuters yesterday that Mr Renzi's administration was preparing to take a €2bn controlling stake in the bank by purchasing junior bonds.
Today a Treasury spokesman denied Italy was poised to ask for a loan from the European Stability Mechanism to support its banking sector.
Mr Renzi addressed his Democratic Party (PD) before meeting the president, saying the party would only participate in a government intended to last until 2018 if it was backed by all the main forces in parliament, a prospect which seems remote.
Otherwise early elections should be held as soon as possible, he said, after the Constitutional Court has ruled early next year on the legitimacy of the current electoral law.
