Financial turmoil engulfs Italy amid political uncertainty

The specter of a financial crisis came back to haunt Italy today, as its markets plunged on fears that the eurozone's third-largest economy is heading toward another election that could shape up to be a referendum on whether to stay in the common currency.

Premier-designate Carlo Cottarelli, a former IMF official, was expected to submit his list of ministers to President Sergio Mattarella in Rome, two days after an attempt by two populist parties to form a government foundered on the president's rejection of their anti-euro economy minister.

Enraged at losing their chance at governing following inconclusive elections in March, both the anti-establishment 5-Star Movement and the anti-euro League vowed with other parties to vote against a Cottarelli government when it faces a vote of confidence in parliament, expected later this week. That would force Italy to new elections in the fall, with
In an annual speech on the state of the Italian economy, Bank of Italy governor Ignazio Visco tried to sound a warning against the tide of populism, saying that "Italy's destiny is that of Europe."