"What is needed is a federal fiscal system, similar to that in the United States," Jes Staley told Italian daily Il Sole 24 Ore.

"Will Europe have time to achieve a fiscal union? I think so, but it will take a long time," he said.

As the euro crisis threatens to tear the currency bloc apart and Spain is becoming the fourth country to seek assistance to rescue its teetering banks, European policymakers have opened to the idea of a more effective fiscal union despite concerns about losing sovereignty.

The goal is for EU leaders to agree to develop a road map to "fiscal union" at a June 28-29 EU summit.

"The idea of a European banking union is good but it is the same as that of joint euro zone bonds: it has been discussed for a while but without making progress," Staley said.

Italy, the world's fourth-largest sovereign debtor, is promoting structural changes to restore growth but is suffering from problems in the bloc, he said.

"Italy is paying the consequences of this uncertainty and is suffering from contagion from Greece and Spain," he said.

Speaking on Saturday, Italy's Industry Minister Corrado Passera pledged renewed action on reforms but expressed disappointment at the bloc's efforts to resolve the crisis.

Euro zone finance ministers agreed on Saturday to lend Spain up to 100 billion euros ($125 billion) to shore up its banks and Madrid said the amount of the bailout would be sufficiently large to banish any doubts.

(Reporting by Antonella Ciancio; Editing by Robin Pomeroy)

• A Permanent Economic Emergency