Italy's cost of borrowing has risen to a new record despite Prime Minister Silvio Berlusconi announcing his intention to resign.
The yield on Italian 10-year government bonds rose to 6.77%, the highest since the euro was founded in 1999.
Italy has more than $2 trillion of debt outstanding and investors fear the eurozone's third-biggest economy could become the next victim of the debt crisis.
Mr Berlusconi said on Wednesday he will step down once Parliament passes urgent reforms demanded by Europe's leaders.
The head of global research at HSBC Bronwyn Curtis says it's unclear whether a new Italian government could quickly implement steep spending cuts and other tough measures to soothe bankers and investors about its heavy indebtedness.
She says to really move forward there needs to be a change and it needs to be shown that steps are being taken.
However, she says it's going to be incredibly difficult because growth is the biggest problem.
Forecast growth is not high enough to get Italy's debt burden down, she says.