The Banco de España and the banking supervision architecture in the 20th century through its key milestones: 1921, 1962 and 1977

Banking supervision in Spain during the 20th century can be understood through three pivotal moments: 1921, 1962, and 1977. The Banking Law of 1921 introduced basic prudential regulations and for the first time entrusted the Banco de España – then a private institution – with the inspection function, although it was hardly exercised before the Civil War. After a period without any effective supervision during the Franco regime (1939-1955), inspections were resumed under the oversight of the Ministry of Finance, focusing on compliance with interbank interest rate agreements. After the nationalisation of the Banco de España, the 1962 Framework Law reinstated its supervisory responsibility, which was resumed gradually. Over the following years the Inspection Service and the Central Credit Register were created and an in-house inspectorate was set up. The decisive transformation towards modern supervision came with the 1977 banking crisis. Institutions such as the Deposit Guarantee Scheme and the Banking Corporation were established and the Inspectorate was strengthened with more resources and specialised training. At the same time, the process of European integration and Spain’s accession to international organisations contributed to the convergence of Spanish regulations on solvency and banking risk.