ABSTRACT
This chapter analyses the development of banking in Spain between 1844 and 1874, a period that begins with the appearance of the first banks of issue and ends with the centralisation of banknote issue under the Bank of Spain. The Bank of San Fernando discounted bills of exchange and promissory notes for a maximum period of 100 days and the operation required three bank-approved signatures, one of which had to be local. Collateral is one of the most delicate aspects of banking operations. The Bank of Spain, which had been acting as its principal guarantor until then, requested that the government grant permission to restrict the circulation of its banknotes. Interestingly, the banking regulations in Spain were not explicit and they excluded current accounts and cash deposits from the banks’ reserve requirements. The explanatory memorandum for the order sets out a completely new conception of banking regulation.
