25 Pesetas – Spain

In 1996, Spain's currency situation was defined by its pivotal position within the European Monetary System (EMS) and the broader march toward Economic and Monetary Union (EMU). The peseta, after a turbulent first half of the decade, was relatively stable but under constant market scrutiny. A severe crisis in 1992-93 had forced a series of devaluations and the peseta's eventual exit from the EMS Exchange Rate Mechanism (ERM), only to re-enter at a significantly lower parity. By 1996, with the election of Prime Minister José María Aznar's center-right government, the primary economic objective was unequivocal: to meet the strict Maastricht Treaty convergence criteria—on inflation, interest rates, budget deficits, and public debt—to qualify for the first wave of the European single currency, the euro.

The year was thus characterized by a rigorous austerity drive and structural reforms aimed at fiscal consolidation. The government implemented deep spending cuts and pursued privatization programs to reduce a public deficit that exceeded 6% of GDP, while the Bank of Spain maintained a tight monetary policy to control inflation and ensure exchange rate stability within the ERM bands. This discipline was essential to convince both European partners and financial markets of Spain's commitment and economic credibility. Success was not guaranteed, as the country grappled with high unemployment, which remained above 20%, creating social tension alongside the technocratic push for convergence.

Ultimately, 1996 proved to be a decisive turning point. The successful stabilization of the peseta and demonstrable progress on the Maastricht criteria set the stage for Spain's formal inclusion in the eurozone in May 1998. The peseta's exchange rate was irrevocably fixed at 166.386 pesetas to one euro, marking the beginning of the end for the national currency. The year's policies cemented Spain's place in the core of the European project, transitioning the currency situation from one of vulnerability and crisis management to one of preparation for the historic adoption of the euro on 1 January 1999.