Explainer: Italy's constitutional referendum & Matteo Renzi's great political gamble

What are the reforms?

The reforms are not exactly insignificant - they seek to change 47 of the 68-year-old constitution's 139 articles.

Most significantly, they seek remove power from the senate and would mean that proposed laws will only require the approval of the lower house of parliament, as opposed to the current system which requires approval from both houses.

Renzi, the former mayor of Florence, has championed the "yes" vote, possibly gambling away his political future. Populist party 5SM has been at the forefront of the "no" vote. If the vote edges that way, it would mean the extensive checks required for both houses to pass laws would remain in place.

Those who are for it say that it will streamline processes, allowing for swift implementation. The naysayers believe it will concentrate too much power with the legislature and is likely to create more problems than it would solve.

The latest opinion polls, published before a two-week blackout phase of polling in Italy, indicated a 53.5% to 46.5% in favour of the "no" camp.

It will be Italy's third constitutional referendum. In 2001, voters approved changes to the constitution. In 2006, the reforms were rejected.

What will happen after the result is announced?

If the overhauls are not rejected, 41-year-old Renzi, who came to power after a political coup in 2014, will stay in office till the end of his term. Elections would then be held next in 2018, when the current parliament's term will end.

If the "no" camp emerges victorious Renzi would most likely resign as he has indicated in weeks prior to the referendum. If he does, President Sergio Mattarella will have to consult with political parties about who to appoint as a temporary caretaker until elections take place some time in 2017.

Will there be other consequences?

Across Europe and the world, the popularity of populist parties is surging. Even Donald Trump's can be attributed to the phenomena. In fact, former comedian Beppe Grillo, the leader of the populist 5SM, hailed the US election result as a "massive screw you" from voters and urged Italians to follow suit on 4 December. It would be a symbolic win, particularly after Brexit, signalling a shift in the political landscape.

A win for the "no" vote could set the ball rolling for mastic political changes across the eurozone - the group of European countries that use the euro as their national currency. It would pave the way for the 5SM, which has long been advocating the euro be abandoned.

That has the worst implication of them all - Italy is one of the original founding countries of the European Union, and an exit would mean grim times ahead for Europe.

How will the market deal with the referendum?

Should Renzi lose the upcoming referendum, it will definitely usher in a period of financial instability. This will completely derail the fledgling recovery of the eurozone's third-largest economy, which had been weakened by a deep recession.

A "no" vote could also conceivably cause financial instability and possibly even panic among investors which would therefore be significantly detrimental to Italy's banking sector - officials and senior bankers anticipate that up to eight of Italy's troubled lenders are at risk of failure. The upheaval would then likely spread to other countries in the eurozone who too have ailing economies.

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