Bank of Spain - History

History

Originally named the Banco Nacional de San Carlos, its first director was French banker François Cabarrus, known in Spain as Francisco Cabarrús.

Following a series of wars between 1793 and 1814, the bank was owed more than 300 million reales by the state, placing it in severe difficulties.

Treasury minister Luis López Ballesteros created a fund of 40 million reales in 1829 against which the bank could issue its own notes within Madrid. It did so after renaming itself Banco Español de San Fernando.

In 1844 the competing Banco de Isabel II and Banco de Barcelona were established, followed in 1846 by the Banco de Cádiz. In 1847 following overexposure in the failing property market of Madrid, the Banco de Isabel II merged with Banco de San Fernando, retaining the latter's name.

Under the guidance of Ramón Santillán in the 1850s, the bank extended its operations to the cities of Alicante and Valencia and took its current name, Banco de España. Requiring financial support from the bank to back its civil and colonial wars, the government of Spain granted the Banco de España a monopoly on the issuance of Spanish bank notes in 1874. Construction of the bank's headquarters building began in the 1880s.

In 1936, 510 tonnes of gold reserves were transferred to the Soviet Union (in an event known as Moscow gold) corresponding to 72.6% of the total gold reserves of the Bank of Spain.

In 1946 after the Spanish Civil War, the government of General Franco placed the bank under tight control. It was formally nationalised in 1962. Following the restoration of democracy in the late 1970s, the bank began a series of transformations and modernisations which continue to today.

On Spain's entry into the Economic and Monetary Union of the European Union in 1994, the Banco de España became a member of the European System of Central Banks.