Banco de España
Encyclopedia
The Bank of Spain is the national central bank
of Spain. Established in Madrid
in 1782 by Charles III
, today the bank is a member of the European System of Central Banks
.
, 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
.
The Governor of the Bank is formally appointed after the Presidente del Gobierno
has designated him/her by the Spanish monarch
. The Governor must be a Spanish citizen recognized for his or her competence in monetary or banking matters. When a new Governor is named, the Minister of Economy and Finance, in accord with a procedure established by the Congress of Deputies
, informs the competent parliamentary commission. The current Governor is Miguel Ángel Fernández Ordóñez
.
The tasks of the Governor include:
a) Direct the Bank and preside over the Governing Council and Executive Commission.
b) Take primary responsibility for the Bank fulfilling its responsibilities and for doing so in a lawful manner. The Governor has ultimate responsibility authorizing bank contracts and other legal documents and for the Bank's representation before tribunals of justice.
c) Represent the Bank in international institutional contexts.
d) Function as a member of the Governing Council of the Bank and as a member of the General Council of the European System of Central Banks.
The Sub-Governor, designated by the national Government on the recommendation of the Governor of the Bank, should meet all of the official qualifications for the governorship. The Sub-Governor substitutes for the Governor in cases of vacancy, absence or illness, both as director of the Bank and as its representative. Further responsibilities of this office are a matter internal to the Bank, and are delegated by the Governor.
Six Counsellors of the Bank are designated by the national Government, on the proposal of the Minister of Economy and Finance, with the involvement of the Governor of the Bank. They must be Spanish citizens recognized for their competence in economics or law.
The Executive Commission consists of:
The directors general of the Bank attend the meetings of the Executive Commission, with voice but without vote. The Secretary of the Bank functions as secretary of the Executive Commission, but without voice or vote.
The two Counsellors who serve as members of the Executive Commission are designated by the Governing Council, after nomination by the Governor, from among their own members (other than ex officio members). The Governing Council consists of:
Council meetings are also attended by the directors general of the Bank and by a representative of bank personnel (elected by a means determined by the Bank's internal rules), both with voice, but without vote.
The Minister of Economy and Finance or the Secretario de Estado de Economía ("Secretary of State for the Economy" [?]) may also attend (with voice, but without vote) those meetings of the Governing Council which will deal with matters relevant to their portfolios. They may also submit a motion for consideration by the Council.
The Secretary of the Bank functions as secretary of the Executive Commission, with voice, but without vote."
A more detailed explanation of these functions can be found at the Banco de España web site.
Central bank
A central bank, reserve bank, or monetary authority is a public institution that usually issues the currency, regulates the money supply, and controls the interest rates in a country. Central banks often also oversee the commercial banking system of their respective countries...
of Spain. Established in Madrid
Madrid
Madrid is the capital and largest city of Spain. The population of the city is roughly 3.3 million and the entire population of the Madrid metropolitan area is calculated to be 6.271 million. It is the third largest city in the European Union, after London and Berlin, and its metropolitan...
in 1782 by Charles III
Charles III of Spain
Charles III was the King of Spain and the Spanish Indies from 1759 to 1788. He was the eldest son of Philip V of Spain and his second wife, the Princess Elisabeth Farnese...
, today the bank is a member of the European System of Central Banks
European System of Central Banks
The European System of Central Banks is composed of the European Central Bank and the national central banks of all 27 European Union Member States.-Functions:...
.
History
Originally named the Banco Nacional de San Carlos, its first director was French banker François CabarrusFrançois Cabarrus
François Cabarrus or Francisco Cabarrús Lalanne, conde de Cabarrús was a French adventurer and Spanish financier.-Early life:...
, known in Spain as Francisco Cabarrús.
Following a series of wars between 1793 and 1814, the bank was owed more than 300 million reales
Spanish real
The real was a unit of currency in Spain for several centuries after the mid-14th century, but changed in value relative to other units introduced...
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
Alicante
Alicante or Alacant is a city in Spain, the capital of the province of Alicante and of the comarca of Alacantí, in the south of the Valencian Community. It is also a historic Mediterranean port. The population of the city of Alicante proper was 334,418, estimated , ranking as the second-largest...
and Valencia
Valencia (city in Spain)
Valencia or València is the capital and most populous city of the autonomous community of Valencia and the third largest city in Spain, with a population of 809,267 in 2010. It is the 15th-most populous municipality in the European Union...
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
Moscow gold
The term Moscow Gold , or alternatively, Gold of the Republic , refers to the operation by which 510 tonnes of gold, corresponding to 72.6% of the total gold reserves of the Bank of Spain, were transferred from their original location in Madrid to the Soviet Union a few months after the...
) corresponding to 72.6% of the total gold reserves of the Bank of Spain.
In 1946 after the Spanish Civil War
Spanish Civil War
The Spanish Civil WarAlso known as The Crusade among Nationalists, the Fourth Carlist War among Carlists, and The Rebellion or Uprising among Republicans. was a major conflict fought in Spain from 17 July 1936 to 1 April 1939...
, the government of General Franco
Francisco Franco
Francisco Franco y Bahamonde was a Spanish general, dictator and head of state of Spain from October 1936 , and de facto regent of the nominally restored Kingdom of Spain from 1947 until his death in November, 1975...
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
Economic and Monetary Union of the European Union
The Economic and Monetary Union is an umbrella term for the group of policies aimed at converging the economies of members of the European Union in three stages so as to allow them to adopt a single currency, the euro. As such, it is largely synonymous with the eurozone.All member states of the...
in 1994, the Banco de España became a member of the European System of Central Banks
European System of Central Banks
The European System of Central Banks is composed of the European Central Bank and the national central banks of all 27 European Union Member States.-Functions:...
.
Governing structures
The governing structures of the Bank is divided among four branches:- The Governor.
- The Sub-Governor.
- The Governing Council.
- The Executive Commission.
The Governor of the Bank is formally appointed after the Presidente del Gobierno
Prime Minister of Spain
The President of the Government of Spain , sometimes known in English as the Prime Minister of Spain, is the head of Government of Spain. The current office is established under the Constitution of 1978...
has designated him/her by the Spanish monarch
Spanish monarchy
The Monarchy of Spain, constitutionally referred to as The Crown and commonly referred to as the Spanish monarchy or Hispanic Monarchy, is a constitutional institution and an historic office of Spain...
. The Governor must be a Spanish citizen recognized for his or her competence in monetary or banking matters. When a new Governor is named, the Minister of Economy and Finance, in accord with a procedure established by the Congress of Deputies
Spanish Congress of Deputies
The Spanish Congress of Deputies is the lower house of the Cortes Generales, Spain's legislative branch. It has 350 members, elected by popular vote on block lists by proportional representation in constituencies matching the Spanish provinces using the D'Hondt method. Deputies serve four-year terms...
, informs the competent parliamentary commission. The current Governor is Miguel Ángel Fernández Ordóñez
Miguel Ángel Fernández Ordóñez
Miguel Ángel Fernández Ordóñez is a Spanish economist and politician, member of the Socialist Workers' Party and current Governor of the Bank of Spain. He is the younger brother of Francisco Fernández Ordóñez, also a Socialist politician, and he is married to Inés Alberdi.He was born in Madrid in...
.
The tasks of the Governor include:
a) Direct the Bank and preside over the Governing Council and Executive Commission.
b) Take primary responsibility for the Bank fulfilling its responsibilities and for doing so in a lawful manner. The Governor has ultimate responsibility authorizing bank contracts and other legal documents and for the Bank's representation before tribunals of justice.
c) Represent the Bank in international institutional contexts.
d) Function as a member of the Governing Council of the Bank and as a member of the General Council of the European System of Central Banks.
The Sub-Governor, designated by the national Government on the recommendation of the Governor of the Bank, should meet all of the official qualifications for the governorship. The Sub-Governor substitutes for the Governor in cases of vacancy, absence or illness, both as director of the Bank and as its representative. Further responsibilities of this office are a matter internal to the Bank, and are delegated by the Governor.
Six Counsellors of the Bank are designated by the national Government, on the proposal of the Minister of Economy and Finance, with the involvement of the Governor of the Bank. They must be Spanish citizens recognized for their competence in economics or law.
The Executive Commission consists of:
- The Governor, who presides.
- The Sub-Governor.
- Two Counsellors.
The directors general of the Bank attend the meetings of the Executive Commission, with voice but without vote. The Secretary of the Bank functions as secretary of the Executive Commission, but without voice or vote.
The two Counsellors who serve as members of the Executive Commission are designated by the Governing Council, after nomination by the Governor, from among their own members (other than ex officio members). The Governing Council consists of:
- The Governor.
- The Sub-Governor.
- Six Counsellors.
- The director general of the treasury and of financial policy.
- The vice president of the Comisión Nacional Nacional del Mercado de Valores ("Stock Market National Commission").
Council meetings are also attended by the directors general of the Bank and by a representative of bank personnel (elected by a means determined by the Bank's internal rules), both with voice, but without vote.
The Minister of Economy and Finance or the Secretario de Estado de Economía ("Secretary of State for the Economy" [?]) may also attend (with voice, but without vote) those meetings of the Governing Council which will deal with matters relevant to their portfolios. They may also submit a motion for consideration by the Council.
The Secretary of the Bank functions as secretary of the Executive Commission, with voice, but without vote."
Functions
- Defining and implementing the Eurosystem's monetary policy, with the principal aim of maintaining price stability across the euro area.
- Conducting currency exchange operations consistent with the provisions of Article 109 of the Treaty on European Union, and holding and managing the States' official currency reserves.
- Promoting the sound working of payment systems in the euro area.
- Issuing legal tender banknotes.
- The holding and management of currency and precious metal reserves not transferred to the European Central Bank.
- The promotion of the sound working and stability of the financial system and, without prejudice to the functions of the ECB, of national payment systems.
- The supervision of the solvency and compliance with specific rules of credit institutions, other entities and financial markets, for which it has been assigned supervisory responsibility, in accordance with the provisions in force.
- The placement in circulation of coins and the performance, on behalf of the State, of all such other functions entrusted to it in this connection.
- Preparation and publication of statistics relating to its functions, and assisting the ECB in the compilation of the necessary statistical information.
- Provision of treasury services and financial agent for government debt.
- Adviser to the government, preparing the appropriate reports and studies.
A more detailed explanation of these functions can be found at the Banco de España web site.
See also
- Economy of SpainEconomy of SpainThe economy of Spain is the twelfth-largest economy in the world, based on nominal GDP comparisons, and the fifth-largest in Europe. It is regarded as the world's 20th most developed country....
- :Euro
- Spanish pesetaSpanish pesetaThe peseta was the currency of Spain between 1869 and 2002. Along with the French franc, it was also a de facto currency used in Andorra .- Etymology :...
- Comisión Nacional del Mercado de ValoresComisión Nacional del Mercado de ValoresThe Comisión Nacional del Mercado de Valores is the Spanish government agency responsible for regulating the financial securities markets in Spain...