Sunday’s Italian referendum is another challenging step for Europe and for its nervous financial markets. In the last few days, markets have been experiencing increased volatility, especially for Italian banks, and yields on sovereign bonds of highly indebted European nations have risen.
This is the result of uncertainty about what is to come next. A supporting vote for the proposed constitutional reforms, which would strip the Senate of much of its power, will strengthen the leadership of Prime Minister Matteo Renzi, both in Italy and in Europe, boost confidence about the reform process, and provide a path toward a more pro-growth Europe.
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