The first national bank of Spain, of San Carlos, was founded in 1782 by Carlos III. To cover the pressing needs of the Administration, in its purpose of making Spain, once again, a world power.
The occasion was at the time of the start of the war against England, to recover Gibraltar and Menorca, decisively helping the new United States of America in their fight for their independence. In this context, the bank dealt with the issuance of real vouchers, public debt. And its custody, paying the interest and the amortization of the principal.
It is clear that, in the changing environment, the Banco de San Carlos, in addition to being an agent of the Treasury, was undertaking other essential activities: being a “bank of banks.” That is, lending to the country’s private banks, as a “lender of last resort.”
Within this institutional evolution, Banco de San Carlos changed its name. From San Carlos, it was renamed San Fernando when Ferdinand VII reigned. And it changed to the Bank of Isabel II, with the new queen. To finally be called the Bank of Spain (BdE) from 1856.
In 1874, after some bankruptcies of private banks, the BdE assumed by Royal Decree the monopoly of being the only banknote issuing institute in Spain. “Paper money”, with the capacity to release all kinds of economic and financial burdens.
Other functions would come later: renewal of ticketing, monetary statistics, banking regularization and supervision, economic advisor to the Government, etc. And since 1998 and with the birth of the Euro, the Bank of Spain joined the European Central Bank (ECB), where the Eurogroup’s monetary policy is developed, currently for twenty European countries.
In its activity, the BdE has complete freedom in its decisions. And it is to be hoped that with the new appointments it will continue to maintain its independence.