was first introduced in 1868 after the September Revolution under a decree issued
by the Provisional Government. In order to join Latin Monetary Union, an agreement
adopted in 1865 by France and other European countries to use a common currency,
the Peseta was given a bimetallic standard of gold and silver, the same as the
French Franc. But the Peseta never joined the LMU as all bimetallic systems
collapsed following a steady rise in gold prices. As a result more and more
countries switched to the gold standard and undertook to maintain their currencies
stable against gold. This provided a system of fixed exchange rates between
gold-standard currencies. Spain however remained outside the fixed exchange
rate system for four decades and only joined shortly before the gold standard
collapsed and many countries suspended their currency's convertibility to gold.
the Spanish Civil War, the Peseta was split in two - the Nationalist Peseta
and the Republican Peseta. The Nationalists declared invalid all notes issued
by the Republicans, which contributed to higher inflation on the Republican
side. After the war had ended, Bank of Spain notes were made full legal tender
for the first time and the silver coinage still in circulation was completely
withdrawn. In the political isolation during Franco's Dictatorship, Spain carried
out its own monetary policy to dire consequences. A worsening of the balance
of payments deficit led Spain to apply to the IMF in 1967 to devalue the Peseta
and the new parity was set at 70 Pesetas per Dollar. The period of political
and economic uncertainties in the USA coincided with a period of considerable
political and social unrest in Spain as the Franco Dictatorship neared its end,
and their very expansive monetary policy did nothing to stop inflation in Spain
reached 14% in 1973.
of the Dollar entailed a revaluation of the Peseta, and after the collapse of
the Bretton Woods system, the Peseta adopted an administered floating rate system,
free of exchange rate commitments. During and after the transition to democracy
following the first democratic general elections in 1977, the inflation in Spain
fell very slowly largely due to the complex economic difficulties the country
faced and the lack of the political will to tackle inflation.
joined the exchange-rate mechanism of the European Monetary System in 1989.
Having being devalued four times, resulting in a total 24% devaluation against
the German mark, the Peseta has fared well since then under the newly autonomous
central bank and the Government's credible monetary policy, meeting the Maastricht
criteria with ease in order to join the single currency.
was launched on 1st January 1999 as an electronic currency and became
legal tender on 1st January 2002, but attempts to create a single
currency go back 20 years.
January 2002 the Euro currency, notes and coins, began to circulate and be used
in the 12 countries which comprise the European Economic and Monetary Union
(EMU). Spain is a member of EMU. From 1st January until 28th
February 2002 the Euro and the Peseta will be used in Spain. From 1st
March 2002 only the Euro will be accepted as legal tender though Peseta notes
and coins can be exchanged at any of the Bank of Spain offices for an indefinite
of the 15 EU countries (Germany, France, Italy, Spain, Portugal, Belgium, Luxembourg,
the Netherlands, Austria, Finland, Greece and Ireland) are members of the Eurozone.
process began to make the Euro the common currency for the member states of
the European Community, there has been a steady acceptance for it in Spain as
the alternative to the Peseta. All merchandise was marked with prices both in
Pesetas and Euros throughout 2001 thus allowing consumers the first-hand opportunity
to familiarise themselves with the new currency.
in Spain are generally happy to acknowledge the practical convenience of having
a common currency with their neighbouring countries without having to worry
about ever-fluctuating exchange rates, although the older generation may have
a hard time with the physical conversion. There has also been a noticeable effort
to clean up the 'black economy', bringing about a boom in the property market
as money comes out from under old mattresses.
concern remains with the Euro's continuing weakness against the Dollar and this
is giving a strong argument to those still opposed to the single currency.
Is The Rate Of Exchange?
fixed at Pesetas 166.386 = 1€
eight Euro coins:
1 Cent Coin =
2 Cent Coin =
5 Cent Coin =
Coin = 17 Pesetas
Coin = 33 Pesetas
Coin = 83 Pesetas
1 Euro Coin = 166 Pesetas
2 Euro Coin = 333 Pesetas
seven Euro notes:
5 Euro Note =
10 Euro Note =
20 Euro Note =
50 Euro Note =
Note = 16.639 Pesetas
Note = 33.277 Pesetas
Note = 83.193 Pesetas
banks and foreign exchange offices will dispense Euro currency.
amusement machines and photo booths will similarly be converted to Euro use.
of stores, shops, hotels, restaurants, bars, public transport, and all other
services should, after 1st January 2002, give change in Euros for
any purchase or service paid for in Pesetas. However, you may find that some
outlets will continue to give change in Pesetas.
the dual circulation period prices will be shown in both currencies.
stamps and postal services will be converted to Euros.
bank accounts will be converted to Euros.
pensions and other incomes received by local residents will be paid in Euros.
be used for visits to the other EMU countries (Austria, Belgium, Finland, France,
Germany, Ireland, Italy, Luxembourg, Netherlands, Portugal and Greece.)
the larger shops and stores in the United Kingdom are expected to accept them
bearing the national symbol of one country will be acceptable as legal tender
in the other EMU countries.
cheques will have a fixed exchange rate.
and debit cards can be used for Euro payments.
Consulates in Spain will be able to accept payment in Euros only for consular
services applied for after 1st January 2002.
About Exchanging Pesetas?
coins can be exchanged, free of charge at any Spanish bank until 30th
June 2002. After that they can be exchanged at the Bank of Spain.
with peseta notes at home will be able to exchange them at UK banks or foreign
cheques issued before the changeover will be accepted after 1st January
2002 for an indefinite period.
with the two currencies - though this may be difficult, best to use one currency
at a time.
for unscrupulous retailers who will take advantage of the changeover to raise
prices. A Government Code of Good Practice has been introduced and retailers
subscribing to the code will display the Code Logo.
for it in shop windows. Market stall holders, street and beach vendors, remote
shops, bars and other small establishments, that might not have mastered the
should calculate their own sterling conversion when purchasing expensive items.
travellers' cheque exchange rates may vary during a holiday.
2001, Euro starter kits have been available from banks. They will contain 43
coins and cost Euros 12.2. Get hold of one, as it will give you the chance to
get to know the new currency.
sales in Spain will start as usual on 7th January 2002 even though
in some EMU countries there are plans to put back the start date.
currency has now been in circulation for twelve days here in Ibiza and on first
reflection it takes me back to the early 1970s when the UK currency went decimal.
One day you had 240 (old) pence to the £ and the next day you only had 100 (new)
pence to the £?
my car up with Shell petrol on the eve of the conversation and paid 4 shillings
and 10 (old) pence per gallon. The next day the same petrol cost 30 (new) pence
a gallon, which was an instant, increase of one shilling and twopence a gallon?
first struck me a week last Wednesday on 2nd January. I thought Iíd
be a good boy by taking all my (old) pesetas to the bank and exchange them for
Euros, where they were chuckling as I was given in replacement 6 € for
each of my 1.000 pesetas (old) notes?
claims when he now goes for change to the bank he has to takes a donkey with
him to carry the coins. Whereas before 100.000 Pesetas of coinage used to be
a manageable amount to carry but now the equivalent of 601.01 € in coins
requires a strong arm. Furthermore, a pint of beer that cost 300 pesetas and
the asking price should now be 1.80 € has in most bars been rounded up
to 2 €, which is equal to 333 pesetas. Can you imagine strolling along
this summer to Cafť del Mar for a quiet drink and paying for your coffee with
a 500 € note? I donít care because I prefer a pint of Guinness.
itís good to have our lovely Emily Kaufman back on board after her family holiday
in Madrid over Christmas to write her more than worthy of note weekly column
on the History of Ibiza.