20 Euro – Spain

In 2010, Spain was in the grip of a severe economic crisis, but its currency situation was paradoxically stable because it was a member of the Eurozone. Having adopted the euro in 1999, Spain no longer controlled its own monetary policy or currency valuation; these were managed by the European Central Bank (ECB) in Frankfurt. This meant Spain could not devalue its currency to regain competitiveness, a traditional tool for countries facing massive trade deficits and high debt. Instead, it was locked into a shared currency with stronger economies like Germany, which exacerbated its internal economic imbalances.

The core of Spain's crisis was not currency fluctuation but a burst property bubble and a resulting banking crisis, which led to a dramatic surge in public debt and unemployment. As investor confidence evaporated, the risk premium Spain paid to borrow money (measured by the spread between Spanish and German 10-year bond yields) began to climb alarmingly. This sovereign debt crisis raised fears that Spain might require an international bailout, similar to Greece and Ireland, and sparked speculative pressures within the Eurozone framework. The stability of the euro itself was called into question, as markets worried about the potential for a euro breakup or a Spanish default.

Consequently, the currency situation was defined by Spain's struggle within the euro's constraints. The government implemented harsh austerity measures and labor reforms in an attempt to reassure markets and EU partners, aiming to reduce its deficit without the tool of devaluation—a process known as "internal devaluation." The period culminated in 2012 with Spain formally requesting a European bailout, not for the sovereign state directly, but for its crippled banking sector, underscoring how the single currency had transformed a national financial crisis into a pivotal test for the entire Eurozone's architecture.