Sergio Matarella, the Italian president, is expected to ask a former IMF official to head an interim government amidst political and constitutional unrest as early elections are on the horizon.
The anti-establishment parties have abandoned their plans to form a coalition government, expressing anger at the president's use of the veto to elect an economy minister skeptical of the EU.
Financial markets have risen for some time against the background that the Italian economy is the third largest economy in the euro zone will not be led by a government hostile to the single currency. But the markets soon abandoned these gains amid a warning that no government would win a vote of confidence in parliament, meaning it would be a temporary step until new elections are held.
