Two years ago, president Giorgio Napolitano reluctantly accepted an unprecedented second term because squabbling politicians couldn’t agree on a successor.
But citing his advanced age, Mr Napolitano, a popular figurehead, said he did not plan to serve all seven years of the second mandate.
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After submitting his resignation, Mr Napolitano, 89, and his wife walked past an honour guard at the presidential Quirinal Palace and returned to their Rome apartment to shouts of “welcome back” and “bravo”.
Parliament and regional electors must hold an election within 15 days for a new president. The largely ceremonial office is traditionally held by someone considered above the political fray.
One of Mr Renzi’s chief goals is to overhaul the electoral system to make governments more stable. He won support for the project from arch-rival Silvio Berlusconi shortly before snatching the premiership from a fellow Democrat in 2014.
In order to secure continued support from Mr Berlusconi, many observers believe Mr Renzi might accept a candidate backed by the media mogul and former premier, who cannot hold public office himself because of a tax-fraud conviction.
“Let’s hope the presidential election isn’t goods for barter between Renzi and Berlusconi,” said populist Northern League leader Matteo Salvini.
There was no immediate cross-party consensus on a candidate to succeed Mr Napolitano, a parliament veteran.
The president’s duties include shepherding efforts to forge a new coalition if a government collapses – not a rare event in Italy – and calling new elections if parliamentary support cannot be found for a new premier.
Some commentators have predicted that Mr Renzi may opt for elections if he cannot find support for a replacement for Mr Napolitano.
The president’s role is mainly ceremonial, although he can choose a prime minister and dissolve parliament. That power has been seen as crucial in recent years.
Mr Napolitano was praised by some for using it to dismiss Mr Berlusconi as prime minister at the height of Italy’s sovereign debt crisis in 2011.
Mr Renzi paid tribute to the president’s public service in the European Parliament in Strasbourg, describing him as a long-serving public servant who had dedicated his life to Italy and to Europe.
Mr Napolitano was first elected to parliament in 1953 and became president in 2006.
He was a well-known member of the Democratic Left, the rebranded name for the Cold War-era Communists.
His supporters see him as a bastion of stability amid Italy’s political uncertainty, but his critics view him as representing a tarnished political class who often acted beyond his powers.
Parliament’s lower house will name the date for the election of his successor by 1,009 parliamentarians and regional representatives.
The process must start within 15 days.
The voting requires a two-thirds majority within the first three rounds. If that produces no winner, only a simple majority is required in the fourth round.
The voting process can be highly unpredictable, with lawmakers using the secret ballot to settle political grievances.