An Italian crisis would be an "implosion" and have severe consequences for the country's banking system, the former chief of the Eurogroup told CNBC Friday.

Financial markets have fretted about Italy's 2019 budget, amid new plans to increase public spending. There are strong concerns that such fiscal plan will derail the reduction of the country's debt pile — which is the second largest in the euro zone, totaling 2.3 trillion euros ($2.6 trillion).

Speaking with CNBC on Friday, Jeroen Dijsselbloem, the previous head of the group that brings together the 19 euro zone finance ministers, told CNBC that if Italy were to turn into a crisis mode, it would be an "implosion," given the way that its economy is organized.

"If the Italian crisis becomes a major crisis, it will mainly implode into the Italian economy ... as opposed to spreading around Europe," he said. "Because of the way that the Italian economy and the Italian banks are financed, it's going to be an implosion rather than an explosion."

The Italian government and the European Commission have been embroiled in a battle of words for the last couple of weeks over the new spending plans. On Thursday, the Brussels-based institution sent a letter to the Italian finance minister, Giovanni Tria, warning him that the 2019 budget draft seemed to point to a "particularly serious non-compliance with the budgetary policy obligations laid down" in European rules.

The problem in the commission's eyes is not so much the headline deficit of 2.4 percent of gross domestic product, which is actually below the EU's 3 percent threshold. The more worrisome figure for that office is the structural deficit. The new spending targets point to a structural deterioration of 0.8 percent of GDP in 2019. In contrast, Italy had committed last April to improve its structural deficit by 0.6 percent of GDP next year.