DOMESTIC POLICY

Many of his most difficult challenges as king would be from domestic problems in Spain itself. Spain in the early 17th century was a collection of possessions the kingdoms of Castile, Aragon, Valencia and Portugal, the autonomous provinces of Catalonia, complete with the wider provinces of Naples, the Netherlands, Milan, etc.

In the first years of his reign, heavily influenced by  Olivares, Philip focused on efforts to reform the most chaotic aspects of this system. Philip had clear intentions to try to control the Spanish currency. In 1627 Olivares had attempted to deal with the problem of the bankers by declaring a state bankruptcy. By the 1630, Philip's domestic policies were being increasingly impacted by the financial pressures of the Thirty Years' War, and in particular the growing war with France. Crisis came in 1640. Portugal independence was recognised in 1668.