Bullion imports caused inflation; the money supply increased without corresponding increases in the production of goods and services. https://en.wikipedia.org/wiki/Price_revolution

What an interesting topic. One of the further reading links is to a paper that claims the inflation started earlier in the 1500s, due in part to the rise of German silver mining: https://web.archive.org/web/20110706211346/http://repec.econ...

It would be interesting to learn about the technological developments Spain failed to make compared to some of their European neighbours. Merchant banking is one of them.