Rome (CNN) -- Italy's top political
leaders are sitting down with the president Sunday, seeking a replacement for
Silvio Berlusconi, the flamboyant prime minister who resigned amid a financial
crisis Saturday.
President Giorgio Napolitano was
scheduled to meet the heads of the Senate and the lower house of Parliament
Sunday, among other politicians, during the course of a full day of
consultations, his office said.
Napolitano could name a new prime
minister as early as Sunday, with former European commissioner Mario Monti
being suggested as a possible candidate.
Berlusconi's resignation was greeted
with cheers and dancing in the streets, as people waved the Italian flag and
sang the nation's anthem.
He is the second prime minister to
resign this month over the debt crisis sweeping across Europe. Greece's George
Papandreou was replaced Wednesday by Lucas Papademos, a former European Central
Bank official.
Berlusconi resigns as Italy's PM Berlusconi:
Parliament is paralyzed Italy running out of options
It's not yet clear if Italy will opt
for a technocrat as its next leader.
Support appeared to be growing this
week for Monti to take the helm of a technocratic administration. Other names
also floated include former Justice Minister Angelino Alfano and Gianni Letta,
Berlusconi's chief of staff.
Berlusconi has said he does not
intend to stand again if new elections are called.
But in a letter to the head of a
far-right party, Berlusconi suggested he did want to return to power.
"I hope to be able to undertake
with you the path of government," he said in a letter to Francesco
Storace, the head of the right-wing La Desta party.
"I'm proud of what we've managed
to achieve in these three and half years, which were marked by an unprecedented
international crisis," Berlusconi said in the letter which was posted on
his Facebook page. It was dated before his resignation.
The 75-year-old business magnate
stepped down just hours after the lower house of parliament approved austerity
measures aimed at restoring confidence in Italy's economy.
Since entering politics nearly two
decades ago, Berlusconi has been one of his country's great survivors, hanging
on despite facing numerous trials, on charges ranging from corruption to having
sex with an underage prostitute, none of which has resulted in a jail term.
The billionaire was elected for the
third time in 2008, under the banner of the newly created People of Freedom
party.
In the three and a half years since,
his colorful personal life has claimed ever more headlines, as his second wife
filed for divorce, he was charged with having sex with an underage nightclub
dancer and abusing power, and the so-called "bunga-bunga" parties
held at his home gained international notoriety.
On Tuesday, he failed to win a
parliamentary majority on a budget vote that should have been routine, and had
to face the inevitable: his days at the helm were numbered. In the end, it was
his perceived failure to tackle Italy's debt crisis rather than any private
scandal which had brought him down.
On Saturday, the Italian lower house
of parliament approved a series of austerity measures demanded by Europe to
shore up confidence in the country's economy. It passed by a vote of 380 for to
26 against.
The package, which includes spending
cuts and proposals to boost growth, was approved by the Senate Friday,
resulting in a market surge.
The measures include pension reform,
with plans to raise the retirement age from 65 to 67, the privatization of
state-owned companies and sale of state-owned properties, the liberalization of
certain professions, and investment in infrastructure.
Italy is the the third-largest
economy using the euro, and a meltdown would have a massive impact on global
markets.
Berlusconi had pledged to step down
once the austerity measures passed both houses of parliament after losing his
majority.
The structural reforms demanded by
the European Central Bank and the European Commission must be brought in
without delay, said Emma Marcegaglia, head of the Italian employers'
association, Confindustria.
"These reforms are the only thing
that can take us out of the current situation," she said. "We have no
choice. We cannot wait for three months for the next elections, this would mean
the destruction of Italy. "
She said a rapid solution to the
political uncertainty in Italy was essential to put it "firmly back on the
road to credibility."
She added: "We are not Greece,
we are a strong economy, we are the world's eighth largest economy. We have
many state assets and have lots of potential. But we have to survive this very
difficult situation."
Italian borrowing costs continued to
ease Friday, after spiking above 6.75% Wednesday, giving investors hope that
Italy is finally starting to make some progress toward addressing its massive
debt problems.
Yields on Italian 10-year bonds were
trading at 6.5% Friday after dipping as low as 6.43%. While that's still
stubbornly above 6%, it's finally moving in the right direction.
It is imperative to keep Italy's
10-year bond yields well below 7% because that was the level that eventually
led to bailouts for Ireland, Portugal and Greece.
Currently, Italy -- the biggest bond
issuer in Europe -- possesses a massive gross debt of roughly €1.9 trillion and
a debt-to-GDP ratio of 120%. The country is widely considered to be too big to
fail. But it may also be too big to bail.
From Hada Messia and Matthew Chance, CNN
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