Spanish Prime Minister Mariano Rajoy dissolved the parliament of Catalonia on Friday, Reuters reported.
Earlier in the day Catalonia's parliament voted to establish an independent republic.
"The Catalan parliament has approved something that in the opinion of the great majority of people doesn't just go against the law, but is a criminal act," Rajoy said after the vote, according to the Financial Times. "It supposes declaring something that is not possible," he said.
In a Twitter post, the prime minister called for calm.
"The rule of law will restore legality in Catalonia," he wrote.
Rajoy said that elections will be held in Catalonia in December, according to Reuters.
Spain's IBEX closed the Friday trading session down about 1 percent with Spanish banks leading the losses.
At 3:39 p.m. ET the euro had dipped to $1.1601 and was about 0.42 percent lower for the session.
Correction: This story has been revised to reflect the correct exchange rate for the euro.