Italy's political upheaval stokes banking crisis

Luigi Scazzieri of the Centre for European Reform says there is hope that investors will not be put off. “In the immediate term they might find it slightly more difficult to raise capital, which they need to cover their bad loans,” Scazzieri said. “However, nothing has really changed in the banking situation since the situation previous to the referendum.”...The opposition Five Star Movement — which tops opinion polls — is demanding immediate elections and a vote on leaving the euro; but, Scazzieri says fears that Italy will exit the single currency are overplayed as new electoral laws will most likely deliver a coalition government."The new law crucially is going to be based on a proportional system most likely,” Scazzieri said. “ And such a system is going to make it extremely hard for single parties such as the Five Star Movement to gain power at the next elections; but, of course they are calling for a referendum on the euro. The small matter is that this is actually unconstitutional."