The Undersecretary of the Treasury in Villena, Juan Jose Olivares, announced the decision to open a Bank of Spain account on behalf of the Villena City Council. The move aims to maximize the returns on public funds, especially in light of the limited profitability offered by many private financial institutions. By centralizing funds, the council seeks safer placement and more favorable terms than those available through conventional private banking channels.
As part of this approach, the council plans to contribute a substantial portion to the account. The transfer amount is approximately 15 million euros, reflecting the city’s effort to centralize liquidity and improve financial management. Olivares noted that the Bank of Spain’s interest framework makes the arrangement financially attractive, potentially yielding an estimated monthly return in the vicinity of 23,000 euros. This figure is cited as a clear justification for pursuing the account opening as a strategic financial measure.
Villena will see a consolidated budget of around 27 million euros, with an allocation of about 6.3 million euros earmarked for investments. This operation shifts the city’s posture from paying interest on borrowed or idle funds to earning interest on deposited public funds, a transformation that is expected to bolster the municipality’s capacity to finance projects of municipal interest. The head of finance for the PSOE-Verdes de Villena coalition highlighted the positive impact of this change on the city’s fiscal flexibility and project delivery.
For the mayor of the treasury, establishing an account with the Bank of Spain offers multiple advantages. The arrangement is described as reinforcing direct relationships among public institutions, reducing exposure to potential bankruptcy risks associated with commercial and private entities, and leveraging favorable interest rates that are available to public bodies. These benefits collectively contribute to a more resilient local financial framework and support for long-term municipal initiatives. The emphasis remains on prudent risk management, stronger liquidity, and improved funding capacity for essential services and infrastructure in Villena.
Overall, the decision reflects a broader trend in regional governance toward centralizing treasury activities within trusted public financial institutions. This strategy aligns with goals of safeguarding taxpayer money, improving yield on public balances, and ensuring that municipal operations can sustain themselves through stable, predictable funding sources. By prioritizing secure deposits with the Bank of Spain and maximizing the returns on public funds, Villena seeks to strengthen its financial footing while maintaining the ability to invest in community projects and services that residents rely on.
Experts note that this type of arrangement can provide a lower risk profile for public funds, thanks to the Bank of Spain’s standing and regulatory oversight. In practice, the city’s treasury team will monitor liquidity flows, compare performance against alternative placements, and ensure compliance with relevant budgetary rules. The result is a more transparent, accountable, and effective use of municipal resources, with the potential for enhanced creditworthiness and better long-term planning for Villena’s residents.
As Villena continues to progress on its investment agenda, the treasury’s strategic move to a public banking partner is likely to influence other municipalities. The emphasis remains on safeguarding public assets while unlocking value through careful management of interest earnings and disciplined capital deployment. In this context, the Bank of Spain account stands as a cornerstone of Villena’s financial stewardship, reinforcing the city’s commitment to prudent governance and responsible budgeting.