What effect did the Spanish empire in North and South America have on politics back in Europe?

The Spanish colonization of the Americas had an important effect on the politics back in Europe.

The main effect is that the Empire made Spain the most powerful European nation, at least in Western Europe. Spain became wealthier, and used a lot of that newly acquired wealth to fund wars in the European Continent.

For example, Spain became the leader of the Catholic world during the Reformation, leading the Counter-reformation, and the Catholic armies in the Thirty years war.

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the 2nd option is the answer