The sixth series of Swiss banknotes from 1976, recalled by the SNB in 2000, is no longer legal tender, but can be exchanged for regular banknotes until April 2020. Banknotes and coins can no longer be legal tender if they are replaced by new banknotes of the same currency or if a new currency is introduced to replace the previous currency. [6] Examples: Legal tender can be defined as the currency of a nation in the form of paper money and coins. Legal tender is considered valid for the payment of all financial obligations. Nationally recognized legal tender varies from country to country. However, there are some exceptions. In 2018, in the face of devastating hyperinflation, Venezuelan President Nicolas Madura ordered all federal institutions to accept a new electronic currency, the Petro, as legal tender. The Venezuelan Petro is centrally controlled by the Venezuelan government based on its own assessment of the value of its natural resources. It has been claimed that the Petro is backed by Venezuela`s natural gas, mineral and oil reserves. However, Venezuela`s experience with the Petro has not progressed much, and the Petro, despite its status as legal tender, does not generally circulate in the form of currency. The Decimal Currency Act 1970 regulated legal tender prior to the introduction of the euro and contained provisions similar to those laid down in UK law (all taken from earlier UK legislation), namely: coins over 10 pence were legal tender for payments not exceeding £10, coins of up to 10 pence were legal tender for payments not exceeding £5, and the bronze coins were legal tender for a payment not exceeding 20 pence.
Banknotes are not legal tender in Scotland. [42] Scottish banknotes are legal tender but are not legal tender anywhere in the United Kingdom. [43] Bank of England banknotes are legal tender in England and Wales and are issued in denominations of £5, £10, £20 and £50. They can still be exchanged at the Bank of England, even if they are interrupted. Banknotes issued by Scottish and Northern Ireland banks are not legal tender anywhere, but are widely accepted by agreement between the parties. [41] In 1964, the Reserve Bank of New Zealand Act again stipulated that only notes issued by the Reserve Bank were legal tender. The Act also ended the right of individuals to redeem their banknotes for coins, thereby eliminating 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 dollars in New Zealand dollars and above, all decimal coins, predecimal pence, shilling and guilder. The Decimal Currency Act, which created the basis for a decimal currency introduced in 1967, was also passed in 1964.
Some jurisdictions allow contract law to take precedence over legal tender, allowing merchants to indicate, for example, that they do not accept cash payments. [2] Coins and banknotes are generally defined as legal tender in many countries, but personal cheques, credit cards and similar cashless payment methods are not. Some jurisdictions may include a particular foreign currency as legal tender, sometimes as exclusive legal tender, or at the same time as their local currency. Some jurisdictions may prohibit or restrict payments from non-legal tender. [ref. needed] In some jurisdictions, legal tender may be rejected as payment if there is no debt before the time of payment (the obligation to pay may arise at the same time as the offer to pay). For example, vending machines and transport personnel are not required to accept the highest face value of the ticket. Merchants can refuse large banknotes, which falls under the legal concept of invitation to treatment. [clarification needed] Legal tender was first introduced for gold and silver coins in the French Penal Code of 1807 (Art.
475, 11°). In 1870, legal tender was extended to all banknotes of the Bank of France. Anyone who objects to such coins because of their total value would be prosecuted (French Penal Code, art. R. 642-3). In June 1874, Congress set a maximum greenback circulation limit of $382,000,000, and in January 1875, passed the Specie Payment Resumption Act, which reduced the circulation of greenbacks to a revised limit of $300,000,000 and required the government to release them after $1. January 1879 on request for gold. As a result, the currency was strengthened, and by April 1876, banknotes were on par with silver coins, which later returned to circulation. [20] On May 31, 1878, the contraction of the circulation was stopped at $346,681,016 – a level that would be maintained for nearly 100 years thereafter. [21] While $346,681,016 was a significant number at the time, today it is a very small fraction of the total currency in circulation in the United States. By 1879, Sherman, then Secretary of the Treasury, was in possession of enough cash to redeem the notes as he wished, but since this equated the value of the greenbacks with gold for the first time since Specie`s suspension in December 1861, the public voluntarily accepted the greenbacks into the circulating environment.
[15] This led to a situation where the “legal tender” notes of the 1862 greenback were fiat, and therefore gold and silver were retained and paper circulated at a discount due to Gresham`s law. The 1861 sight notes were a great success, but deprived the customs office of the much-needed gold coin (interest on most bonds was paid in gold at the time). A financially troubled Congress, which had to pay for the war, eventually passed the Legal Tender Act of 1862, which issued U.S. notes backed only by government bonds, forcing people to accept the new notes at a discount; Prices went up, except for those who owned gold and/or silver coins. As of 2005, banknotes were legal tender for all payments, and $1 and $2 coins were legal tender for payments up to $100, and 10c, 20c and 50c silver coins were legal tender for payments up to $5. These old silver coins were legal tender until October 2006, after which only the new 10c, 20c and 50c coins introduced in August 2006 remained legal. [29] On the other hand, gold or silver coins are not necessarily legal tender if they are not fiat money in the jurisdiction in which they are offered in payment. The Currency Act of 1965 states (in part): Legal tender guaranteed that creditors had to accept banknotes even if they were not secured by gold, bank deposits or government reserves and had no interest.
However, the first legal tender law did not make banknotes as legal tender unlimited because they could not be used by traders to pay import duties and could not be used by the government to pay interest on their bonds. The law stipulated that the bonds would be available from the government for short-term deposits at an interest rate of 5% and for the purchase of bonds at 6% interest at 20 years at par. The justification for these conditions was that the Union Government would preserve its solvency by supporting the value of its bonds by paying its interest on the gold. At the beginning of the war, customs duties accounted for a large portion of the government`s tax revenue, and by making them payable in gold, the government generated the coin needed to pay interest on bonds. Finally, making the bonds available for purchase at par in US debt securities would also confirm the value of the latter. [3] Restrictions on legal tender were quite controversial. Thaddeus Stevens, chairman of the House Ways and Means Committee, which drafted an earlier version of the legal tender law that would have made U.S. notes legal tender for all debts, condemned the exceptions, calling the new law “malicious” because it made U.S. bills a currency deliberately devalued by the masses. while the banks that lent to the government got “sound money” in gold.
This controversy continued until the exemptions were repealed in 1933. Australia Post prohibits the sending of coins or banknotes from any country except by registered mail. [17] The Bank Note Issue Act of 1893 allowed the government to declare a bank`s right to issue legal tender. This allowed the government to make such a statement in support of the Bank of New Zealand when the bank ran into financial difficulties in 1895 that could have led to its collapse. Series 2 banknotes, first issued in 1925 during the reign of Rama VI and continued during the reign of Rama VII, added the caption: In 1914, the Bank Amendment Act gave banknotes the legal tender status of each issuer and removed the requirement that banks allowed to issue banknotes they must exchange them for gold at demand (the gold standard). Demonetization is the act of stripping a monetary unit of its legal tender.