Europe Braces For the Italy Vote

On December 4, Italians will vote on constitutional changes aimed at streamlining the countryâ??s complex political system. Prime Minister Matteo Renzi has said he may resign if the reforms are defeated, raising fears of prolonged political instability in Italy and renewed economic turbulence across Europe. If Renziâ??s government falls, the governmentâ??s bank rescue efforts could be impaired. â??That uncertainty could easily generate a self-fulfilling run on the banks as capital pulls out of the country,â? says CFR Senior Fellow Robert Kahn in a written interview. Italyâ??s problems reflect the vulnerability of the broader European economy, he says, and trouble in its banking system could tip the continent back into crisis.