Payment systems evolved from decentralized networks to centralized systems coordinated by a national bank. Contrary to the view that centralization was a natural economic process driven by the gradual concentration of interbank deposits in reputable banks, this research highlights state-driven institutional change. In Spain, the Bank of Spain secured a monopoly on national banknote issuance in 1874 during a civil war, despite opposition from regional issuing banks. While Northern Spain’s industrial growth challenged Madrid’s dominance as the payment system’s center, political motivations ultimately cemented Madrid as Spain’s geographical monetary center to support the nation-state’s building.