Base interest rate

The basic interest rate came into effect in July 1969, with the publication of the Ministerial Order of July 21. It determined that the rediscount rate (the rate applied to commercial or financial discounting of instruments presented by credit institutions) would constitute a basic interest rate from which, and through an established margin, the rest of the Banco de España’s interest rates would be set.

The margins to determine the rest of the Banco de España’s interest rates were as follows:

• Personal loans, +1.5
• Secured loans: on goods, +1.5; on commercial instruments, +1.5; on securities, +1.5
• Special lines authorized by the Ministry of Finance: export financing and sale of ships in the domestic market, -1.3
• Rest of the special lines, +0.0.

This basic interest rate was set by the Ministry of Finance and communicated to the Bank of Spain through ministerial orders published in the Official State Gazette

The Ministerial Order of July 23, 1977, liberalized these interest rates, so there was no longer a predetermined relationship between the basic interest rate and the rest of the interest rates applied by the Banco de España. In any case, the basic interest rate continued to be set by the Ministry of Finance.

This basic interest rate also acted as the legal interest rate from July 4, 1984, according to Law 24/1984, of June 29. This law specified that the legal interest rate would be equal to the basic rate, unless the General State Budget Law established a different one.

The basic interest rate was in force until January 1998, according to Law 66/1997. This law establishes that all references to the basic rate would be understood, from that moment on, as the legal interest rate.

Despite being in force until 1998, this and other interest rates of the Banco de España stopped being published in issue 9/1988 of the Banco de España’s Statistical Bulletin. The reason for discontinuing its publication was that this interest rate no longer served as a reference for other interest rates, losing its financial significance. Additionally, it lacked a connection with the interest rates that the Bank of Spain effectively applied in the money markets.