Following the introduction of the euro on 1 January 1999, some of the functions previously carried out by the national central banks of the euro area were redefined.
In the case of Spain, the Law of Autonomy of the Banco de España had to be amended to include the authority of the European Central Bank (ECB) to define the monetary policy of the euro area and its powers in respect of exchange rate policy. The Law also needed to be adapted to the provisions of the Treaty on the Functioning of the European Union (TFEU), the Statute of the European System of Central Banks (ESCB) and ECB guidelines and instructions.
Functions as a member of the ESCB
Since 1 January 1999, the Banco de España has performed the following basic functions attributed to the ESCB:
- Defining and implementing the Eurosystem's monetary policy, with the primary aim of maintaining price stability across the euro area.
- Conducting foreign-exchange operations consistent with the provisions of Article 219 of the TFEU, and holding and managing the State's official foreign reserves.
- Promoting the smooth operation of payment systems and, without prejudice to the functions of the ECB, of national payment systems. This includes emergency liquidity assistance (ELA) operations.
- Issuing legal tender banknotes.
Functions as a national central bank
Observing the functions resulting from membership of the ESCB, the Law of Autonomy confers the following functions on the Banco de España:
- Holding and managing foreign-currency and precious metal reserves not transferred to the ECB.
- Promoting the smooth operation and stability of the financial system and, without prejudice to the functions of the ECB, of national payment systems. This includes emergency liquidity assistance (ELA) operations.
- Supervising solvency and compliance with the specific regulations of credit institutions and any other financial institution or market it has been called on to oversee.
- Placing coins in circulation and performing, on behalf of the State, any other related functions entrusted to it.
- Preparing and publishing statistics related to its functions and assisting the ECB in the compilation of statistical information.
- Providing treasury services and acting as financial agent for government debt.
- Advising the Government and preparing the appropriate reports and studies.