Europe’s decision to offer Spain’s battered banks a 100 billion euros ($A127.76 billion) bailout is a sign that confidence is returning, the EU’s chief regulatory official says.

EU commissioner Michel Barnier said earlier financial aid packages to Portugal and Ireland were “starting to bear fruit” and Europe was taking “the right decisions” for its future.

“Confidence is starting to return among Europeans,” Barnier, responsible for the EU’s internal market and services, told 3,000 participants at the opening of the International Economic Forum of the Americas in Montreal.

The EU commissioner raised the thorny issue of tightening fiscal integration among the 17 countries that use the euro, and possibly in the wider 27 members of the European Union, later on.

Recent proposals for a so-called banking union would involve giving the EU commission more power in controlling national budgets and therefore requiring governments to cede some sovereignty.

Barnier told AFP that taking steps toward tighter integration would be “absolutely essential” for the eurozone, and that the measures would be proposed to other EU members.

“We are at a moment of truth” in terms of European integration, he said.

“The choice is whether we go further or we go back” in the face of protectionism.”

He argued for a “more direct supervision and more important role for the European Banking Authority and the European Central Bank” to ensure that a minimum amount of money or ‘resolution fund’ would be available to stabilise crisis-hit lenders.

Barnier has said that national governments might have to impose levies to create such a fund.

The regulatory official was due to leave Montreal for New York for meetings with Paul Volcker, former chairman of the US Federal Reserve.

Canadian Prime Minister Stephen Harper and Bank of Canada Governor Mark Carney were also due to address the forum.