Spain's Currency: Why the Euro and Financial Innovation Matter Today

When discussing what currency does Spain use, the answer is straightforward yet reflects a significant economic transformation. Spain adopted the Euro (€) as its official currency, joining one of the world’s most influential monetary systems. This transition marked not just a change in currency, but a pivotal moment in European integration that continues to shape Spain’s role in the global economy.

The Euro: Spain’s Path to Modern Financial Integration

Spain’s relationship with the Euro began on January 1, 1999, when it replaced the Spanish Peseta (ESP) for electronic transactions. This initial phase allowed the financial system to transition smoothly. Then, on January 1, 2002, Euro banknotes and coins entered circulation, completing the shift from physical Pesetas to the new common currency. Since then, the Euro has served as Spain’s sole legal tender for all financial transactions.

Today, Spain is one of 20 EU member states using the Euro, collectively forming the Eurozone. The Euro itself is the world’s second-most used currency after the US Dollar, circulating among approximately 341 million people daily. Its design reflects European unity: eight coin denominations (1, 2, 5, 10, 20, and 50 cents, plus 1 and 2 euros) feature both common European symbols and national designs chosen by each country. Seven banknote denominations showcase architectural styles representing different periods of European history.

The benefits of using a unified currency extend beyond convenience. The Euro facilitates cross-border trade, tourism, and investment across the EU, reduces transaction costs and exchange rate risks, and helps maintain a large, stable economic zone—all factors that have supported Spain’s economic growth and integration into European markets.

Spain’s Bold Experiment: Digital Money Innovation

While the physical Euro remains dominant, Spain is actively exploring its digital future through innovative projects. The Banco de España (Bank of Spain) recently authorized Monei, a fintech company, to conduct trials of a euro-backed digital token under Spain’s financial sandbox program. This controlled environment allows the central bank to supervise financial innovation safely while testing new technologies.

Monei developed EURM, a blockchain-based digital asset backed by physical euros held in reserve at two major Spanish banks: Banco Bilbao Vizcaya Argentaria and Caixabank. The token is designed to enable quick, cost-effective transactions between verified users. After identity verification through phone and video identification, users can fund digital wallets with real euros and transfer EURM tokens representing amounts up to 10 euros.

This initiative demonstrates Spain’s commitment to staying at the forefront of financial technology, even as it maintains its foundational relationship with the traditional Euro.

The Bigger Picture: EURM and the Road to Digital Euro

Understanding EURM requires distinguishing it from the broader European digital currency initiative. The European Central Bank (ECB) has been investigating the creation of a central bank digital currency (CBDC)—a Digital Euro that would complement existing cash. The ECB completed its investigation phase and is advancing toward potential implementation of this official digital Euro.

Monei’s EURM is distinctly different: it’s a private-sector initiative using blockchain technology rather than an official CBDC issued by the ECB. However, the project holds strategic significance. As Monei’s representative noted, testing and refining such tokens through Spain’s supervised sandbox could establish valuable groundwork. The success and learnings from projects like EURM could inform how the ECB ultimately designs and deploys its official digital currency, creating a collaborative pathway between private innovation and central bank policy.

The Takeaway

When asked what currency Spain uses, the answer encompasses both tradition and innovation. Spain’s adoption of the Euro has been instrumental in its economic integration into Europe, while its experimentation with digital tokens like EURM positions it as a testing ground for the financial systems of tomorrow. As Europe explores digital currencies, Spain’s dual approach—maintaining confidence in the Euro while pioneering tokenized solutions—reflects the continent’s measured yet forward-thinking stance on monetary evolution.