The present letter is sender by The Governing Council of the European central Bank, Jean Claude Trichet

And Mario Draghi. It is addressed to the Italian Prime Minister.

This is a formal letter in which, in the first paragraph (after the writer had clarified the addressee), the Governing Council supports that “pressing action by the Italian authorities is essential to restore the confidence of investors”.

Going on with the letter; The Euro area Heads of State or Governing summit (21 July 2011) reinforce the thesis: Italy’s need to urgently underpin the standing of its sovereign signature and its fiscal sustainability and structural reforms.

Respond to the letter, Italy decided to introduce steps taken by Italy not enough towards a balanced budget in 2014.

In the following paragraph there are reported the main steps; each one is supported by argumentation and examples and its function is explained by points A to C:

1)     Competition increase in: public services quality improvement, regulatory and fiscal system design more suitable to support firms competitiveness and labour market efficiency.

A)    Reform strategy (liberalization of public and professional services)

B)    Further reform the collective wage bargaining system, 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; establishment of an employment insurance system and to ease reallocation of resources in view of more competitive firms and sectors.

2)     Immediate and bold measures to ensuring the sustainability of public finances.

A)  Additional corrective fiscal measures (to fronload the mesures adopted in the July 2011)      package by one year. Expenditure cuts intervene further in the pension system Retirement: age for  women in the private sector in line with the one of public employees Significantly reduce the cost of        public employees.

B)  Warning about due time to carry out reforms: introduction of deficit reducing clause

            C)  Borrowing (commercial debt and regional and local governments expenditures) should be placed

      under tight control.

3)     Take as soon as possible measures to overhaul of the public administration (to improve administrative efficiency and business friendliness), systematic use of performance indicators

(health, education and judiciary systems), abolish or consolidate some intermediate administrative layers exploiting economies of scale in local public services.

In conclusion they trust the Government will take appropriate actions.