Italy's president has sworn in western Europe's first populist government - a mix of anti-establishment and right-wing ministers who have promised an "Italy first" agenda which has has alarmed Europe's political establishment.
President Sergio Mattarella's veto of 81-year-old euroskeptic Paolo Savona as economy minister appeared to tip the country back toward repeat elections and triggered a dramatic speculative attack on Italian financial markets.
League leader Salvini and Five-Star chief Luigi Di Maio will both be Deputy Premier sand Salvini will be Interior Minister while Di Maio will serve as Welfare Minister, according to the sources.
The crucial Economy Ministry was entrusted to Giovanni Tria, a professor of Political Economy at Rome Tor Vergata University who is favorable to Italy's continued adherence to the euro-zone.
The Italian president reappointed law professor Giuseppe Conte as Prime Minister-designate on Thursday in order to lead a coalition government.
The new government coalition consists of the anti-establishment 5-Star Movement and the right-wing League.More news: Microsoft is Planning to buy GitHub at $2 Billion
Newly-appointed Ministers sit during the swearing-in ceremony at the Quirinal palace in Rome, Italy, June 1, 2018.
Salvini has branded as "racist" advice from European Commission President Jean-Claude Juncker for Italians to work harder and be less corrupt instead of blaming their woes on the EU.
"The formation of a political government is by far the best solution for the country, because it avoids the uncertainty that would arise with new elections", Cottarelli said after meeting with Mattarella.
The government was formed after three months of political deadlock following inconclusive March 4 elections, with the former rivals striking a last-minute deal on Thursday to avert a fresh vote in high summer amid growing market turmoil.
The two enraged parties abandoned their joint bid for power, and on Monday, Mr Mattarella asked former International Monetary Fund economist Carlo Cottarelli to form a caretaker government created to take Italy to planned elections later this year.
Republic Day commemorates the day, June 2, 1946, when Italians voted in a referendum to abolish the monarchy in favor of a republic, Italy's first.More news: Giuliani: Trump team would try to avert subpoena
Now he is heading into government with southerner Luigi Di Maio and the Five Star Movement, which picked up the vast majority of its seats in the south.
"Starting today, we get to work to create work", Di Maio said in a Facebook video giving Italians a tour of the empty ministry.
The new government delighted leaders of an increasingly bolder far-right in European politics.
Mr Conte who has been criticised as being a "Mr Nobody", named hardline anti-migrant Mr Salvini as Interior Minister, while Mr Di Maio will become Minister for Economic Development.
Italy's political instability over the last few months has put other EU members on edge, concerned that this new government may leave the union and the Euro, which could precipitate the collapse of the EU.
"That must not happen again in the present case with Italy", Juncker said.More news: England edges ahead of Pakistan on rain-hit day