Italy’s Central Bank’s governor, Ignazio Visco, said on Friday that he favours reforming the European Stability Mechanism (ESM) but without triggering market panic.

The euro zone’s bailout fund has been designed as a lender of last resort for the 19-member Eurozone. However, the Italian government fears that widening the scope of the ESM’s mandate to include debt restructuring could trigger a sudden rise of sovereign rates rise for the southern periphery.

“This is a matter to be handled with care,” the European Central Bank Governing Council member said during a speech in Rome.

“The small and uncertain benefits of a debt-restructuring mechanism must be weighed against the huge risk that the mere announcement of its introduction may trigger a perverse spiral of expectations of default, which may prove to be self-fulfilling,” Visco said.

Italy has the biggest sovereign debt among Eurozone member-states in absolute numbers and the second biggest in terms of debt-to-GDP ratio. Standing at 135% of Italy’s GDP, the sovereign debt of Europe’s fourth-biggest economy is second only to Greece.

Instead of or in addition to a focus on restructuring, Visco called for “some form of supranational insurance” against default, which would appease investors, financed by dedicated resources of the participating countries.

Visco also called for a focus on growth that would go beyond quantitative easing and focus on public spending. The European single currency “needs to interact with a single fiscal policy” Visco said.

New data on Italian inflation are a clear sign of a decelerating economy. On Friday, Italy’s national statistical service released the latest data on inflation that indicate a 0.2% rate — down from 0,3% in September – which is the lowest level since November 2016.

According to a Reuters poll, Eurozone inflation in 2020 will be subdued to reach 1.2%, which is well below the 2% goal set by the European Central Bank.

The President of the European Central Bank Christine Lagarde and the Governing Council met last week to discuss their division over monetary policy given low level of inflation and low growth. Germany, the Netherlands, and Austria are against quantitative easing and resist calls for increased public spending.

Italy’s call for synchronized fiscal response is shared by Lagarde and her predecessor Mario Draghi but there seems little consensus over the second wave of quantitative easing, let alone an expansive budgetary policy.