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Italy's upcoming referendum on constitutional reform is not only "very important," but also has the potential to catalyze repercussions Europe-wide, according to the chief executive of Italy's biggest utility.

"If Italy votes 'yes' then all of a sudden Europe will say, 'OK, Italy is indeed progressing on the reform path.' … Therefore the pressure (may move) to another country that will go into the electoral cycle next," Enel's CEO Francesco Starace said on CNBC Conversation.

The baton of change would likely be passed onto France, with this country's presidential election due to take place in April next year, he added.

Italy's referendum for constitutional reform is due to take place on December 4, and proposes streamlining the legislative process by decreasing the power of the country's second chamber, its senate. Italian Prime Minister Matteo Renzi has staked his political reputation on the vote, having vowed to resign if the electorate rejects his proposal.

For Starace, the issue of reducing the senate's power "needs to be addressed." He asserted that, "if you reform the senate then the legislative process becomes more nimble and more direct, and therefore other reforms have a better chance to go through without being changed so much that they are basically useless.

"The big deal is that they (Senate) are the largest slowing factor ... in the Italian reforming system," Starace told CNBC. He added that the appetite for change had been part of several preceding governments, but this had been unsuccessful.

Italian Premier Matteo Renzi.
Simona Granati/Corbis via Getty Images

Italians aren't stupid

Speculating on the outcome, Starace said that, "If Italy votes 'no' then the investor will say, 'OK Italy is starting to become a little bit slow in the process. It was going OK, now it's slowing.'"

For Starace, investors would then question both the Italian government and the country's banks.

"All of a sudden things that are a problem become a bigger problem because the perception is that there is no push to change," he warned.

With regards to the Italian electorate's perception of Prime Minister Renzi, Starace said that, "you cannot govern a country and be out of the system, it's impossible."

Acknowledging political instability in Italy, Starace added that politicians who currently oppose the referendum's proposal initially voted 'yes' when part of the chamber and senate.

"I don't think Italians are stupid … when it's time to vote they will remember that," he said.

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