2Financial institutions
2.1 Central Bank
The Spanish Central Bank is the Bank of Spain. It is the national central bank, entrusted with supervising the Spanish banking system, and its activities are regulated by the Law on the Autonomy of the Bank of Spain.
Following the creation of the European System of Central Banks (ESCB) and the European Central Bank (ECB), the Bank of Spain’s functions have been redefined as follows:
FUNCTIONS OF THE BANK OF SPAIN| Participation in the functions of the European System of Central Banks (ESCB) | Defining and implementing monetary policy in the euro zone with the aim of maintaining price stability in the euro zone. |
| Conducting foreign currency exchange transactions and holding and managing the Spanish State’s official foreign exchange reserves. | |
| Promoting the sound working of the euro zone payment system. | |
| Issuing legal tender banknotes. | |
| Functions established in the Law on the Autonomy of the Bank of Spain | Supervising the solvency and behavior of credit institutions and the financial markets. |
| Promoting the sound working and stability of the financial system and of Spain’s payment systems. | |
| Preparing and publishing statistics on its functions. | |
| Providing treasury services and acting as a financial agent for government debt. | |
| Advising the Government and preparing the appropriate reports and studies. | |
| Holding and managing currency and precious metal reserves not transferred to the ECB. | |
| Placing coins in circulation and performing, on behalf of the State, all other functions entrusted to it in this connection. |
The inclusion of the Bank of Spain in the Single Supervisory Mechanism
Council Regulation (EU) 1024/2013 of October 15, 2013, has created a Single Supervisory Mechanism (SSM), which introduces a new financial supervision system made up of the European Central Bank (ECB) and the Competent National Authorities (CNA) of the participating EU member states, which include the Bank of Spain. The ECB’s Regulation (EU) No 468/2014 of 16 April 2014 establishes the framework for cooperation within the SSM between the ECB and CNA and with national designated authorities.
Its main objectives are to ensure the safety and soundness of the European banking system and to enhance financial integration and stability in Europe. In addition, the SSM plays a crucial role in ensuring a coherent and effective implementation of the Union’s policy relating to the prudential supervision of credit institutions.
Under additional provision sixteen of Law 10/2014, of June 26, 2014, on regulation, supervision and solvency of credit institutions, the Bank of Spain was included in the SSM in its capacity as a competent national authority, whereby the Bank of Spain will exercise its regulatory and supervisory powers, notwithstanding the functions entrusted to the ECB in the context of the SSM and in conjunction with this institution.
