In 1965, the Coinage Act was passed and defined the legal tender of the United States as U.S. coins and currencies. This currency included the banknotes of the Federal Reserve circulating from the national banks and the Federal Reserve. The Coin Act formalized the fact that such a currency must be accepted as payment of taxes, levies, public charges and debts. It also restored the value of U.S. commercial dollars that had been demonetized before. Individual coins or banknotes may be demonetized and are no longer legal tender (e.g. the pre-decisive British farthing or the 1-pound Bank of England note), but the Bank of England redeems all Bank of England notes by exchanging them for legal tender at its London counters (or by post), than: their age. Banknotes issued by retail banks in the UK (Scotland and Northern Ireland) are not legal tender, but one of the criteria for legal protection under the Falsification and Counterfeiting Act is that banknotes must be payable on request, so confiscated banknotes remain a temporal responsibility of the issuing bank. [Citation needed] The Swiss franc is the only legal tender in Switzerland.
Any payment of up to 100 Swiss coins is legal tender; Banknotes are legal tender for any amount. [32] Here is a history (mainly focused on the United States) of notable events in legal tender law: in 1964, the Reserve Bank of New Zealand Act stated that only notes issued by the Reserve Bank were legal tender. The Act also ended the right of individuals to redeem their notes for coins, thereby ending the distinction between coins and banknotes in New Zealand. The Act came into force in 1967 and established as legal tender all banknotes of five New Zealand dollars or more, all decimal coins, the sixth predecimal power, the shilling and the guilder. The Decimal Currency Act was also passed in 1964, which laid the foundation for a decimal currency introduced in 1967. On December 11, 2016, the Venezuelan government announced demonetization after inflation of nearly 500% in the country. The inhabitants of the country had 3 days to get rid of the 100 bolivar notes (the most used currency) after the introduction of a new note with higher denominations. As of June 15, 2017, there have been 7 renewals (one per month) of the legal use of 100 bolivar notes. The 100 bolivar notes were still legal tender as of December 30, 2017. No banknote is legal tender in Scotland.
[42] Scottish banknotes are legal tender, but are not legal tender anywhere in the UK. [43] On November 8, 2016, Prime Minister Narendra Modi announced that the existing INR 500 and 1000 notes would no longer be accepted as legal tender in order to combat counterfeiting, tax evasion and the informal economy. [27] The Reserve Bank of India has developed a system allowing holders of these banknotes to deposit them in their bank accounts for the full and unlimited value or to exchange the banknotes for new banknotes, subject to a cap. [28] In general, Canadian dollar bank notes issued by the Bank of Canada and coins issued under the supervision of the Royal Canadian Mint Act are legal tender in Canada. However, commercial transactions may be legally carried out in any manner agreed by the parties involved in the transactions. For example, convenience stores may reject $100 worth of banknotes if they believe they are at risk of counterfeiting. However, official policy suggests that retailers should assess the impact of this approach. In the event that no mutually acceptable form of payment can be found for the offer, the parties concerned should seek legal advice. [21] Legal tender laws also determine which institutions create and manage the currency. In the United States, these institutions are the Treasury and the Federal Reserve.
The Treasury Department currently issues coins and currency in denominations: 1, 5, 10, 25, 50 and 100 cents, and $1, $2.5, $10, $20, $50, and $100. The new Taiwanese dollar issued by the Central Bank of the Republic of China (Taiwan) is legal tender for all payments in the territory of the Republic of China, Taiwan. [33] However, since 2007,[34] candidates who become officials in elections in the Republic of China are no longer allowed to pay a deposit in the form of documents. [35] Euro banknotes and coins became legal tender in most euro area countries on 1 January 2002. Although one side of the coins for each country is used for different national brands, all coins and banknotes are legal tender throughout the euro area. Although some euro area countries do not put into circulation the 1 cent and 2 cent coins (prices in these countries are always rounded to whole multipliers of 5 cents, according to the common understanding), the 1 cent and 2 cent coins of other euro area countries are legal tender in these countries. The term “legal tender” comes from the tender French medium (verbal form), which means to offer. The Latin root is tendere, and the meaning of tender as an offer is related to the etymology of the English word “extend”. [5] Legal tender serves several purposes. By default, it is used by market participants to fulfill the functions of money in the economy: an indirect medium of exchange, a unit of account, a store of value and a standard for deferred payments.
Proponents of legal tender laws argue that markets generally do not produce the optimal type, quality, and quantity of money, and that legal tender increases the usefulness of money as a means of reducing transaction costs. In particular, legal tender may allow flexibility in the money supply, and a single currency may eliminate the transaction costs associated with the use of several competing currencies. The introduction of legal tender is a means of achieving a single currency. In the United States, recognized legal tender consists of federal reserve banknotes and coins. Creditors are required to accept them as a means of payment for debt relief; However, unless prohibited by state law, private companies may refuse to accept some or all forms of cash offers, provided that no transaction has yet taken place and the customer has not incurred any debt.