The European Central Bank's Letter

This is a formal letter sent by the Governing Council of the European central Bank, Jean Claude Trichet and Mario Draghi to the Italian Prime Minister. The reason why they wrote this letter is the situation in Italy's government bond markets and the Governing Council considers essential a pressing action to restore the confidence of investors.

In the second paragraph the sender points out his thesis: Italy needs to underpin the standing of its sovereign signature and its fiscal sustainability and structural reforms according to the Governmant summit occurred on 21 july 2001. After that the steps taken by Italy are analyzed: they are important but they are not enough.

In the third paragraph a list of urgent needs and measures to be taken is provided to give a advice to the Italian government.

The first need is to increase competition and to improve the quality of public services.
a) Reform strategy of liberalization of public services
b) Further reform the collective wage bargaining nsystem allowing firm-level agreement to tailor wages
and working conditions to firms' specific needs
c)Review of rules regulating the hiring and dismissal of employees should be adopted.

The second need is Immediate measures to ensure the sustainability of public finances.

a) Additional-corrective fiscal measures is needed, it is essential for the Italian authorities to
frontload the measures adopted in the July 2011 package by at least one year In addition, the government should consider significantly reducing the cost of public employees by reducing wages.
b)An automatic deficit reducing clause should be introduced.
c)Borrowing, including commercial debt and expenditures of regional and local governments should be placed under tight control.

After that the The Governing Council of the European central Ban gives a deadline to take the allocation in sections 1 and 2.

The third and last need is an advice to immediately take measures to ensure a major overhaul of the
public administration in order to improve administrative efficiency and business friendliness. In public
entities the use of performance indicators should be systematic.

The letter finishes the trust in the Italian government to reach these targets.