The Italian President nominated Carlo Cottarelli, a former official at the International Monetary Fund, to form an interim government.
President Sergio Mattarella called Cottarelli to the Quirinale, the Italian presidential palace, after previous attempts by Italy's populist parties to form a government failed.
"I am very honored and I will do my best," Cottarelli told journalists outside the Quirinale.
Cottarelli said Mattarella asked him to present a program to Parliament to run Italy until new elections are held early next year.
"If my government wins the confidence vote, there will be new elections at the beginning of 2019 after approving the next budget," Cottarelli said.
However, he will need to win a parliamentary confidence vote, which appears unlikely, meaning snap elections could be held as early as the fall. Forza Italia, the party of former Prime Minister Silvio Berlusconi, said Monday it would not support Cottarelli's appointment.
Cottarelli confirmed he would not run in any new elections.
Italy's current finance minister, Pier Carlo Padoan, in an exclusive interview with CNN's Richard Quest, defended Cottarelli's appointment.
Padoan laid out the potential dangers of the prospective populist government, with its Eurosceptic finance minister.
"The situation is the combination of a clearly inconsistent program proposed by the coalition in terms of sustainability of public finances," he said, "and the fact that one option in the back of the mind of an influential member of the government could generate an explosive outcome."
Asked whether the snap elections will become a dangerous referendum on the euro, Padoan said, "The Italian electorate is wise enough to understand what's at stake and what's good for them."
Situation escalated Sunday
On Sunday, Mattarella said he would appoint a technocratic, or nonpolitical, Prime Minster after the designated choice declined to form a government.
Giuseppe Conte, a law professor and political novice, was put forward last week by the country's populist parties, which won the most votes in an election in March.
But Mattarella told reporters after a meeting Sunday that he objected to Conte's choice for the economic ministry.
He said Conte's candidate, Paolo Savona, was unacceptable because the appointment would alarm investors and have dangerous consequences for Italy's outstanding government debt.
Mattarella said the country is heading for new elections.
"Nobody can say that I have put obstacles to the so-called government of the change," he said, but, "I need to take care of the savings of the Italian people."
Around half of Italy's debt is held by Italian citizens in the form of pension and savings bonds.
The two largest parties to emerge from the March election, the right-wing League and the anti-establishment Five Star movement, are opposed to the euro.
Novice Conte emerged last week
Five Star leader Luigi Di Maio and Matteo Salvini, the League leader, have been locked in talks with Mattarella since the vote.
During the negotiations, the populists ditched some of their most incendiary campaign vows, such as calling for a referendum on whether Italy should abandon the euro or leave the European Union.
Instead they promised a spending and tax-cutting binge that has rattled investors and could contain the seeds of a new European crisis.
A populist government in Rome could make it more difficult for European Union leaders such as French President Emmanuel Macron and German Chancellor Angela Merkel to push further EU political and economic integration.