Italy’s credit rating was cut one level by Fitch Ratings as an inconclusive election in February produced political paralysis that threatens the country’s ability to respond to a recession and the European debt crisis.

Italian bank Monte dei Paschi di Siena sought to calm investors over a trading scandal that has caused its share price to slump and led to much finger-pointing ahead of general elections next month.

The resignation of Italy’s embattled central bank chief has cleared the way for the government to focus on reforming the nation’s scandal-tainted banking industry at a special cabinet meeting today.