Italian Prime Minister Giuseppe Conte, whose country now has the most deaths from COVID-19, is asking the European Union to use its bailout rescue fund to mitigate the economic impact of the pandemic.
Italy is grappling with the highest number of coronavirus cases in Europe. Its death toll of 3,405 has surpassed China's 3,253. Speaking to the Financial Times on Thursday, Conte said "time is of the essence" in the fight against the virus.
The southern European nation has been in national lockdown for more than a week, with the population only allowed to go to the pharmacy and small grocery stores. The virus is bringing the Italian economy a standstill, with a consensus among economists predicting that Rome will not be able to escape a recession in 2020.
Conte said the EU should make use of a 500 billion euro ($539 billion) fund, created at the height of the last decade's sovereign debt crisis to bail out nations, to finance countries struggling to cope with the pandemic.
"The route to follow is to open ESM (European Stability Mechanism) credit lines to all member states to help them fight the consequences of the COVID-19 epidemic, under the condition of full accountability by each member state on the way resources are spent," he said.
His finance minister said Friday the EU needs to use its tools in an "innovative way."
"We should foresee the issue of European securities that can be used by each country under the same conditions and must be related to the fight against coronavirus and its economic consequences," Roberto Gualtieri told Il Corriere della Serra, according to Reuters.
Gualtieri is not the first to discuss the possibility of issuing joint European debt, often named as eurobonds. European leaders briefly debated the possibility on Tuesday. It's highly sensitive because eurobonds would technically group debt into one bond. Countries that are more fiscally sound do not want to have their debt associated with those of highly indebted nations.
As a result, the Italian calls are likely to be received with some skepticism.
Countries such as the Netherlands, Germany and Finland have been wary of further integration for European economies. Overall, nations that are fiscally more conservative are reluctant to share fiscal policy with other nations that tend to spend above their limits.
Florian Hense, European economist at Berenberg Bank, told CNBC via email it would "not be easy" to get a green light for "corona bonds" — a combination of European securities to finance virus-hit economies.
However, "if [German Chancellor Angela] Merkel were to actively make the case for it, it could happen," he said.
In the meantime, the European Central Bank announced a massive stimulus program, that will allow countries in the euro zone to spend more to deal with the impact of the virus.
The ECB's 750 billion euro program, unveiled Wednesday, will buy corporate and public bonds across Europe for the rest of the year, including Greek government bonds — which until now were not deemed safe enough to invest in.
However, analysts have said the latest ECB steps are likely to pour some cold water on the potential for fiscal integration in the euro zone.
"The ECB's intervention will make it harder to build political consensus in favor of collective fiscal action at the euro zone level, disincentivizing EU leaders to think creatively about the use of the European Stability Mechanism or constructing something more ambitious ('coronabonds,' for example)," analysts at Eurasia Group said in a note Thursday.