Economy, Currency and Banking

The monetary unit of Spain is the single currency of the European Union (EU), the euro (1.07 euros equal U.S. $1; 1999 average). Spain is among 12 EU member states to adopt the euro. The euro was introduced on January 1, 1999, for electronic transfers and accounting purposes only, and Spain’s national currency, the peseta, was used for other purposes. On January 1, 2002, euro-denominated coins and bills went into circulation, and the peseta ceased to be legal tender.

As a participant in the single currency, Spain must follow economic policies established by the European Central Bank (ECB). The ECB is located in Frankfurt, Germany, and is responsible for all EU monetary policies, which include setting interest rates and regulating the money supply. On January 1, 1999, control over Spanish monetary policy was transferred from the Bank of Spain to the ECB. After the transfer, the Bank of Spain joined the national banks of the other EU countries that adopted the euro as part of the European System of Central Banks (ESCB).

Spain is served by a large number of commercial banks. The principal stock exchanges are in Madrid, Barcelona, Bilbao, and Valencia.