Eurozone's South still poses an enormous risk

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Prime minister Renzi is desperate to win, not only to avoid triggering his promise to resign if he loses, but also to push through legislation that has spent much of the last couple of years trundling back and forth between the lower house of deputies and the upper house, the senate. Both have equal status and reject each other’s legislative initiatives. The proposed constitutional changes would demote the senate to being a body of 100 members appointed by regional leaders who can discuss regional matters and have oversight of changes to Italy’s relationship with Brussels. No longer, says Renzi, will attempts to liberalise high street chemists and usher in competition get stuck in the system for two years while senators and deputies with equal status cry foul. Senators will have a different job.

Yes, Italy’s constitution needs fixing. But not as urgently as its banks do | Business | The Guardian

There is a silver lining to a No vote. Renzi could be persuaded by the president to form another government with a view to tackling the electoral system. Before elections that must be held in 2018, he could produce a system that recognises the need for a winner from Italy’s three main political blocs, including Silvio Berlusconi’s old party, Forza Italia. If so, a clear winner would solve many of the country’s problems. The government could also make strides to shore up the banking sector, which needs around $40bn by most estimates, to offset the mounting losses from decades of bad loans.

Yes, Italy’s constitution needs fixing. But not as urgently as its banks do | Business | The Guardian

"It's analogous to central bank support of a bank which is illiquid - having trouble raising money on private capital markets - but not insolvent, i.e. its balance sheet is basically OK. The central bank acts as a lender of last resort to banks in that situation. Similarly, under OMT, the central bank would act as a lender of last resort to illiquid national governments - but only with conditions attached," König said.

Is the ECB allowed to prevent eurozone bond market panics? | Business | DW.COM | 15.06.2015

The problem in Italy is that several banks flogged around €30bn of their subordinated bonds to ordinary Italian households, rather than just sophisticated institutional investors such as pension funds and insurance companies. Subordinated, or junior, bonds are first in line for losses in the event of a bail-in. And according to the IMF retail investors also hold a third of the total €600bn of bank bonds.

Italy referendum result: What is going to happen to the country's fragile banks? | The Independent