Economics

What Is the Currency of Spain?

The official currency of Spain is the euro.

Like most European Union (EU) states, Spain has adopted the euro as its official currency. Members of the EU developed a common currency to make traveling and trade easier within the eurozone. Other countries that use the euro include Malta, Slovenia, Netherlands, Italy, Germany, France, Austria, Portugal, Cyprus, Greece, Finland, Luxembourg, and Ireland, among others. The euro used the code EUR and the symbol €, and it can be subdivided in 100 cents. Euro banknotes are available in denominations of 5€, 10€, 20€, 50€, 100€, 200€, and 500€, and coins are minted in 1, 2, 5, 10, 20, and 50 cents, and 1€ and 2€ denominations. The currency is issued by the European Central Bank. The euro is currently the second largest reserve currency worldwide, and ranks second among the most traded currencies in the world’s foreign exchange markets.

History of Spain’s currency

Prior to use of the euro in 2002, Spain used a variety of other currencies. These currencies included the Spanish real, Spanish escudo, and Spanish peseta, and were sometimes used concurrently. Introduced by King Pedro I of Castile, the Spanish real was used from the mid-14th century until 1864. Two forms of the Spanish escudo were later added: silver and gold. Spain used the silver escudo from 1566-1833 and the gold escudo between 1864 and 1869, until it was replaced by the peseta. Spain began to use the peseta when it joined the Latin Monetary Union in October 1868. The peseta was the currency of Spain from 1869 to 2002. The euro became Spain's official currency in 2002.

Transition from Peseta to Euro

When EU countries began to adopt the euro as common currency, a “harmonization” fund was set aside. The objective of the fund was to support poorer EU states in order to minimize economic disparities. Spain was a beneficiary of this fund, and aided in the development of highways, high-speed railways, and airports. The construction of these facilities led to tremendous economic growth of Spain. Today, the country ranks among the top 15 economies worldwide, and among the top 5 economies in Europe. Some of the important industries in Spain include automobiles, clay and refractory, shipbuilding, food and beverages, apparel and footwear, and chemicals. It also produces agricultural products like vegetables, poultry, citrus, sugar beets, grains, and many more.

Exchange Rate of the Euro

The euro is among the most traded currencies in the world and ranks among the United States dollar and the British pound. As of September 25, 2017, 1 euro could be exchanged for 1.18 US dollars. On the other hand, 1 British pound could be exchanged for 1.14 euros. The comparison of these three currencies indicates that the euro is still among the strongest currencies in the world.

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