- Luigi Di Maio of the populist Five Star Movement (M5S) said Sunday that the actions of Italy's president had triggered an "institutional crisis."
- Mattarella, who was installed by a previous pro-EU government, refused to accept the nomination of eurosckeptic candidate Paolo Savona for economy minister.
- The move prompted two of Italy's anti-establishment parties to abandon their plans to try to form a coalition government.
The leader of Italy's largest political party has called for President Sergio Mattarella to face impeachment charges after he refused to accept a controversial choice for economy minister.
Amid a deepening sense of political and constitutional turmoil in the euro zone's third-largest economy, Luigi Di Maio of the populist Five Star Movement (M5S) said Sunday that the actions of Italy's president had triggered an "institutional crisis."
Mattarella, who was installed by a previous pro-EU government, refused to accept the nomination of eurosckeptic candidate Paolo Savona for economy minister. The move prompted two of Italy's anti-establishment parties to abandon their plans to try to form a coalition government.
M5S and the right-wing Lega party (League) have been trying to form an administration since elections in early March failed to produce a clear winner.
"We were a few steps away from forming a government, and we were stopped because in our cabinet there was a minister who criticized the EU," Di Maio said in an interview on RAI state television Sunday.
"I want this institutional crisis to be taken to parliament ... and the president tried," he added.
Mattarella, who serves as head of state and is supposed to be politically neutral, took the unprecedented step of blocking Savona's nomination on the grounds that the candidate had previously threatened to pull Italy from the single currency.
In a televised address, Mattarella said Sunday: "The uncertainty over our position has alarmed investors and savers both in Italy and abroad … Membership of the euro is a fundamental choice. If we want to discuss it, then we should do so in a serious fashion."
While he had agreed to all other ministerial picks, Italy's president said he still had the right to block nominations when it concerned matters which could potentially harm the state. He added both M5S and Lega had refused to put forward any other candidates for the role of economy minister.
The euro initially gained ground on the news but soon fell as traders contemplated a political stalemate and another election. In the stock markets, the FTSE MIB was down 2 percent with some heavy losses seen in the banking sector.
Last week, financial markets tumbled on elevated concerns that the country's impending coalition government would likely prompt a spending splurge — dangerously ramping up Italy's already massive debt pile.
The leader of Italy's Lega party, Matteo Salvini, said Monday he "does not want to talk" about a possible impeachment of Mattarella.
Instead, Salvini told Radio Capital: "We need to keep cool. Some things cannot be done in the throes of anger ... I don't want to talk about impeachment."
His comments appeared at odds with Di Maio's explosive rhetoric on Sunday, when M5S's leader reacted angrily to the breakdown of government talks.
Shortly after Mattarella's move, the president's office reportedly contacted the International Monetary Fund's (IMF) former director of fiscal affairs, Carlo Cottarelli. The call is widely thought to be an initial step in offering the former official a mandate to create a technocratic government.
At midday London time Monday, Reuters reported that the president had officially appointed Cottarelli as interim prime minister. Cottarelli then addressed the media, saying he would put together a government "very quickly" to accompany the country to fresh elections, to be held in the fall or early next year.
Wolfango Piccoli, co-president of risk consultancy Teneo Intelligence, argued the apparent opposition to a so-called neutral government would mean it is likely to fail to win enough support from any subsequent confidence vote.
"This means that Italy will be left with no effective government backed by a clear political majority in parliament until the end of the year. In short, 2018 will be a largely a wasted year, with no ability to deliver any meaningful policy while the end of QE (quantitative easing) is approaching," Piccoli said in a research note published Sunday.