The banking and credit structure centers on the Bank of Spain, the government's national bank of issue since 1874. The bank acts as the government depository as well as a banker's bank for discount and other operations. The European Central Bank determines monetary policy for the EU. Other "official" but privately owned banks are the Mortgage Bank of Spain, the Local Credit Bank of Spain, the Industrial Credit Bank, the Agricultural Credit Bank, and the External Credit Bank.
In 2002, the private banking system consisted of 146 banks, comprising national banks, industrial banks, regional banks, local banks, and foreign banks. The liberalization of the banking system and Spain's entry into the EC have raised the number and presence of foreign banks. During the process of financial liberalization required by the EU, the government tried to promote a series of mergers within the banking industry, which it hoped could enable the banks to compete more effectively. As a result, there were two major mergers: Banco de Vizcaya and Banco de Bilbao formed Banco Bilbao Vizcaya (BBV), and Banco Central and Banco Hispanoamericano merged to form Banco Central Hispanoamercano (BCH). The government also brought together all the state-owned banking institutions to form Corporación Bancaria de España, better known by its trade name Argentaria, whose most important component is Banco Exterior (BEX). The government subsequently privatized a 50% stake in Argentaria in 1993 and a further 25% in early 1996. Ultimately, the state sold its remaining 25% share in Argentaria, thereby leaving the banking sector entirely in private hands. In October 1999, BBV took over Argentaria to create Spain's largest banking group. The International Monetary Fund reports that in 2001, currency and demand deposits—an aggregate commonly known as M1—were equal to $193.7 billion. In that same year, M2—an aggregate equal to M1—plus savings deposits, small time deposits, and money market mutual funds—was $548.2 billion. The money market rate, the rate at which financial institutions lend to one another in the short term, was 4.36%.
Spain has major stock exchanges in Madrid, Barcelona, Bilbao, and Valencia. These exchanges are open for a few hours a day, Tuesday through Friday. Since 1961, foreign investment in these exchanges has increased rapidly. The major commercial banks invest in the equity and debt securities of private firms and carry on brokerage businesses as well. Latibex, a Madrid-based stock exchange providing a market for the trading (in euros) of Latin American stocks, opened in late 1999. The exchange lists companies based in Latin American nations such as Argentina, Brazil, Chile, Columbia, and Venezuela.