Analysis of the Letter of Trichet and Draghi to the Italian Prime Minister

This text is a letter sent to the Italian Prime Minister from the Governing Council, Jean-Claude Trichet and Mario Draghi, so the language is formal.

The letter is organised into four paragraphs:

<!--[if !supportLists]-->·         <!--[endif]-->The first one introduces the purpose of the letter: communicating the conclusion of the discussion occurred on 4 August about Italy’s government bond markets.

<!--[if !supportLists]-->·         <!--[endif]-->In the second paragraph brings back the conclusion of the Euro area Heads of State or Government summit (21 July 2011) to make remember the taken responsibilities. It also recommend Italy to go on with reform to help the country’s fiscal system and economy.

<!--[if !supportLists]-->·         <!--[endif]-->The third paragraph it’s divided in three points which suggest some measure that has to be taken as soon as possible.

In point one the Governing Council recognizes Italy is working to achieve its commitment but it remarks that more measures have to be taken. Furthermore it suggests to be more competitive and it gives some suggestions:

<!--[if !supportLists]-->o   <!--[endif]-->Comprehensive, far reaching, credible reform strategy;

<!--[if !supportLists]-->o   <!--[endif]-->Reform collective wage bargaining system;

<!--[if !supportLists]-->o   <!--[endif]-->Review rules regulating hiring and dismissal of employees, introduction of unemployment insurance system, set of active labour market policies.

The second point regards measures needed which will grant sustainability of public finances:

<!--[if !supportLists]-->o   <!--[endif]-->More corrective fiscal measures to achieve a better fiscal deficit, corrections in pension system, reduce costs of public employees;

<!--[if !supportLists]-->o   <!--[endif]-->Introduce a automatic deficit reducing clause

<!--[if !supportLists]-->o   <!--[endif]-->Be in line with ongoing reforms of intergovernmental fiscal relations.

 In the last point of paragraph three Trichtet and Draghi encourages the Italian Prime Minister to act in order to improve the public administration (i.e. reduce of administrative layers).

<!--[if !supportLists]-->·         <!--[endif]-->In conclusion, the Governing Council communicate its trust towards the Italian Government.