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Legal tender is a form of
money Money is any item or verifiable record that is generally accepted as payment for goods and services and repayment of debts, such as taxes, in a particular country or socio-economic context. The primary functions which distinguish money ar ...
that courts of law are required to recognize as satisfactory payment for any monetary
debt Debt is an obligation that requires one party, the debtor, to pay money or other agreed-upon value to another party, the creditor. Debt is a deferred payment, or series of payments, which differentiates it from an immediate purchase. The d ...
. Each
jurisdiction Jurisdiction (from Latin 'law' + 'declaration') is the legal term for the legal authority granted to a legal entity to enact justice. In federations like the United States, areas of jurisdiction apply to local, state, and federal levels. Ju ...
determines what is legal tender, but essentially it is anything which when offered ("tendered") in payment of a debt extinguishes the debt. There is no obligation on the creditor to accept the tendered payment, but the act of tendering the payment in legal tender discharges the debt. Some jurisdictions allow contract law to overrule the status of legal tender, allowing (for example) merchants to specify that they will not accept cash payments.
Coin A coin is a small, flat (usually depending on the country or value), round piece of metal or plastic used primarily as a medium of exchange or legal tender. They are standardized in weight, and produced in large quantities at a mint in orde ...
s and
banknote A banknote—also called a bill (North American English), paper money, or simply a note—is a type of negotiable instrument, negotiable promissory note, made by a bank or other licensed authority, payable to the bearer on demand. Banknotes w ...
s are usually defined as legal tender in many countries, but personal
cheque A cheque, or check (American English; see spelling differences) is a document that orders a bank (or credit union) to pay a specific amount of money from a person's account to the person in whose name the cheque has been issued. The pers ...
s,
credit card A credit card is a payment card issued to users (cardholders) to enable the cardholder to pay a merchant for goods and services based on the cardholder's accrued debt (i.e., promise to the card issuer to pay them for the amounts plus the o ...
s, and similar non-cash methods of payment are usually not. Some jurisdictions may include a specific foreign currency as legal tender, at times as its exclusive legal tender or concurrently with its domestic currency. Some jurisdictions may forbid or restrict payment made by other than legal tender. In some jurisdictions legal tender can be refused as payment if no debt exists prior to the time of payment (where the obligation to pay may arise at the same time as the offer of payment). For example, vending machines and transport staff do not have to accept the largest denomination of banknote. Shopkeepers may reject large banknotes, which is covered by the legal concept known as invitation to treat. The right, in many jurisdictions, of a trader to refuse to do business with any person means that a would-be purchaser may not force a purchase merely by presenting legal tender, as legal tender must only be accepted for debts already incurred.


Etymology

The term "legal tender" is from Middle French ''tendre'' (verb form), meaning ''to offer''. The ''Latin'' root is ''tendere'' (to stretch out), and the sense of ''tender'' as an ''offer'' is related to the etymology of the English word "extend" (to hold outward).


Withdrawal and replacement


Demonetization

Demonetization is the act of stripping a currency unit of its status as legal tender. It occurs whenever there is a change of national currency: The current form or forms of money is or are pulled from circulation and retired, often to be replaced with new notes or coins. Sometimes, a country completely replaces the old currency with new currency. The opposite of demonetization is remonetization, in which a form of payment is restored as legal tender. Coins and banknotes may cease to be legal tender if new notes of the same
currency A currency, "in circulation", from la, currens, -entis, literally meaning "running" or "traversing" is a standardization of money in any form, in use or circulation as a medium of exchange, for example banknotes and coins. A more general ...
replace them or if a new currency is introduced replacing the former one. Examples of this are: * During the Nazi occupation of the Netherlands, 500- & 1000-
guilder Guilder is the English translation of the Dutch and German ''gulden'', originally shortened from Middle High German ''guldin pfenninc'' " gold penny". This was the term that became current in the southern and western parts of the Holy Roman E ...
banknotes were demonetized, and after liberation, 100-guilder notes were also demonetized.
Anne Frank Annelies Marie "Anne" Frank (, ; 12 June 1929 – )Research by The Anne Frank House in 2015 revealed that Frank may have died in February 1945 rather than in March, as Dutch authorities had long assumed"New research sheds new light on Anne Fra ...
in
her diary Her is the objective and possessive form of the English-language feminine pronoun she. Her, HER or H.E.R. may also refer to: Arts, entertainment and media Music * H.E.R. (born 1997), American singer ** ''H.E.R.'' (album), 2017 * HIM (Finnish ...
entry on March 19, 1943 notes:
Thousand-guilder notes are being declared invalid. That'll be a blow to the black marketeers and others like them, but even more to people in hiding and anyone else with money that can't be accounted for. To turn in a thousand-guilder bill, you have to be able to state how you came by it and provide proof. They can still be used to pay taxes, but only until next week. The five-hundred notes will lapse at the same time. Gies & Co. still had some unaccounted-for thousand-guilder bills, which they used to pay their estimated taxes for the coming years, so everything seems to be above board.
Piet Lieftinck's measure of demonetizing 100-guilder notes was aimed at war profiteers. * On October 6, 1944, 100 franc was demonetized. People having 100 francs were allowed to exchange up to 2000 francs per household for new banknotes. Banks added withdrawal limits and current accounts were frozen. * The Government of Ceylon passed the
Prevention of the Avoidance of Income Tax Act The Prevention of the Avoidance of Income Tax Act (No 26 of 1970), was an act passed in the Parliament of Ceylon in on 26 October 1970 that demonetized all currency notes in circulation in the island at the time with the denominations of Rupees 5 ...
on 26 October 1970, demonetized all currency notes of the denominations of Rupees 50 and 100, bearing a date prior to that of the demonetization. * The United Kingdom adopted decimal currency in place of pounds, shillings and pence in 1971. Banknotes remained unchanged (except for the replacement of the 10 shilling note by the 50 pence coin). In 1968 and 1969 decimal coins which had precise equivalent values in the old currency (5p, 10p, 50p – 1, 2, and 10 shillings respectively) were introduced, while decimal coins with no precise equivalent (½p, 1p, 2p – equal to 1.2d (old pence), 2.4d and 4.8d respectively) were introduced on 15 February 1971. The smallest and largest non-decimal circulating coins, the half penny and half crown, were withdrawn in 1969, and the other non-decimal coins with no precise equivalent in the new currency (1d, 3d) were withdrawn later in 1971. Non-decimal coins with precise decimal equivalents (6d ( = 2½p), 1 and 2 shillings) remained legal tender either until the coins no longer circulated (1980 in the case of the 6d), or the equivalent decimal coins were reduced in size in the early 1990s. The 6d coin was permitted to remain in large circulation throughout the United Kingdom due to the
London Underground The London Underground (also known simply as the Underground or by its nickname the Tube) is a rapid transit system serving Greater London and some parts of the adjacent counties of Buckinghamshire, Essex and Hertfordshire in England. The U ...
committee's large investment in coin-operated ticketing machines that used it. Old coins returned to the Royal Mint through the UK banking system will be redeemed by exchanging them for legal tender currency with no time limits; but coins issued before 1947 have a higher value for their silver content than for their monetary value. * The successor states of the
Soviet Union The Soviet Union,. officially the Union of Soviet Socialist Republics. (USSR),. was a List of former transcontinental countries#Since 1700, transcontinental country that spanned much of Eurasia from 1922 to 1991. A flagship communist state, ...
replacing the
Soviet ruble The ruble or rouble (russian: wikt:рубль, рубль) was the currency of the Soviet Union, introduced in 1922, replacing the Ruble#Russian Empire, Imperial Russian ruble. One ruble was divided into 100 kopecks ( – ''kopeyka'', ''kopeyki'' ...
in the 1990s. * The successor states of
Yugoslavia Yugoslavia (; sh-Latn-Cyrl, separator=" / ", Jugoslavija, Југославија ; sl, Jugoslavija ; mk, Југославија ;; rup, Iugoslavia; hu, Jugoszlávia; rue, label= Pannonian Rusyn, Югославия, translit=Juhoslavij ...
replacing the Yugoslav dinar in the 1990s and 2000s. * Currencies used in the
Eurozone The euro area, commonly called eurozone (EZ), is a currency union of 19 member states of the European Union (EU) that have adopted the euro ( €) as their primary currency and sole legal tender, and have thus fully implemented EMU polic ...
which were replaced by the
euro The euro (symbol: €; code: EUR) is the official currency of 19 out of the member states of the European Union (EU). This group of states is known as the eurozone or, officially, the euro area, and includes about 340 million citizens . ...
were then not legal tender, but all banknotes were redeemable for euros for a minimum of 10 years (for certain notes, there is no time limit). * India demonetised its 500 and 1000 rupee notes on 8 November 2016. This action affected 86 per cent of all cash in circulation. The demonetisation action was intended to curb counterfeit notes and
black money A black market, underground economy, or shadow economy is a clandestine market or series of transactions that has some aspect of illegality or is characterized by noncompliance with an institutional set of rules. If the rule defines the se ...
, the hoarding of unaccounted cash, and sponsorship of terrorism, but also led to long queues from bank runs, leaving more than 30 people dead. The old notes were replaced by new 500 and 2000 rupee notes. * The Philippines has ceased 2 peso and 50 centavo coins of the Flora and Fauna Series in 2000, due to overminting of the coins of the BSP Series that has not included the 2 peso and 50 centavo coins of that series. Individual coins or banknotes can be demonetised and cease to be legal tender (for example, the pre-decimal United Kingdom farthing or the Bank of England 1 pound note), but the Bank of England does redeem all Bank of England banknotes by exchanging them for legal tender currency at its counters in London (or by post) regardless of how old they are. 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 Forgery and Counterfeiting Act is that banknotes must be payable on demand, therefore withdrawn notes remain a liability of the issuing bank without any time limits. In the case of the euro, coins and banknotes of former national currencies were in some cases considered legal tender from 1 January 1999 until various dates in 2002. Most countries continued to exchange pre-euro notes and coins for a period of time; only Ireland continues to do so. Legally, those coins and banknotes were considered non-decimal sub-divisions of the euro. When the so-called "Swiss" dinar ceased to be legal tender in
Iraq Iraq,; ku, عێراق, translit=Êraq officially the Republic of Iraq, '; ku, کۆماری عێراق, translit=Komarî Êraq is a country in Western Asia. It is bordered by Turkey to Iraq–Turkey border, the north, Iran to Iran–Iraq ...
, it still circulated in the northern Kurdish regions, despite lacking government backing it had a stable market value for more than a decade. This is also true of the paper money issued by the
Confederate States of America The Confederate States of America (CSA), commonly referred to as the Confederate States or the Confederacy was an unrecognized breakaway republic in the Southern United States that existed from February 8, 1861, to May 9, 1865. The Confede ...
during the
American Civil War The American Civil War (April 12, 1861 – May 26, 1865; also known by other names) was a civil war in the United States. It was fought between the Union ("the North") and the Confederacy ("the South"), the latter formed by state ...
. The
Confederate currency The Confederate States dollar was first issued just before the outbreak of the American Civil War by the newly formed Confederacy. It was not backed by hard assets, but simply by a promise to pay the bearer after the war, on the prospect of Sou ...
became worthless by its own terms after the war, since it could only be redeemed a stated number of years after a peace treaty was signed between the Confederacy and the United States (which never happened, as the Confederacy was defeated and dissolved). Demonetisation is currently prohibited in the United States, and the Coinage Act of 1965 applies to all US coins and currency regardless of age. The closest historical equivalent in the US, other than Confederate money, was from 1933 to 1974, when the government banned most private ownership of gold bullion, including gold coins held for non- numismatic purposes. Now, however, even surviving pre-1933 gold coins are legal tender under the 1964 act.


Withdrawal from circulation

Banknotes and coins may be withdrawn from circulation, but remain legal tender. United States banknotes issued at any date remain legal tender even after they are withdrawn from circulation. Canadian 1- and 2-dollar bills remain legal tender even if they have been withdrawn and replaced by coins, but Canadian $1,000 bills remain legal tender even if they are removed from circulation as they arrive at a bank. However, Bank of England notes that are withdrawn from circulation generally cease to be legal tender but remain redeemable for current currency at the Bank of England itself or by post. All paper and polymer issues of
New Zealand New Zealand ( mi, Aotearoa ) is an island country in the southwestern Pacific Ocean. It consists of two main landmasses—the North Island () and the South Island ()—and over 700 List of islands of New Zealand, smaller islands. It is the ...
banknotes issued from 1967 onwards (and 1- and 2-dollar notes until 1993) are still legal tender; however, 1-, 2- and 5-cent coins are no longer used in
New Zealand New Zealand ( mi, Aotearoa ) is an island country in the southwestern Pacific Ocean. It consists of two main landmasses—the North Island () and the South Island ()—and over 700 List of islands of New Zealand, smaller islands. It is the ...
.


Cashless society

A cashless society describes an economic state whereby
financial transaction A financial transaction is an agreement, or communication, between a buyer and seller to exchange goods, services, or assets for payment. Any transaction involves a change in the status of the finances of two or more businesses or individuals. ...
s are not conducted with money in the form of physical
banknote A banknote—also called a bill (North American English), paper money, or simply a note—is a type of negotiable instrument, negotiable promissory note, made by a bank or other licensed authority, payable to the bearer on demand. Banknotes w ...
s or coins. Cashless societies have existed, based on
barter In trade, barter (derived from ''baretor'') is a system of exchange in which participants in a transaction directly exchange goods or services for other goods or services without using a medium of exchange, such as money. Economists dist ...
and other methods of exchange. In modern usage, the term usually refers to financial transactions conducted by transfer of digital information (usually an electronic representation of money) between the transacting parties.


Commemorative issues

Sometimes currency issues such as commemorative coins or transfer bills may be issued that are not intended for public circulation but are nonetheless legal tender. An example of such currency is Maundy money. Some currency issuers, particularly the Scottish banks, issue special commemorative banknotes which are intended for ordinary circulation (though no Scottish banknotes nor notes from Northern Ireland are legal tender in the United Kingdom). As well, some standard coins are minted on higher-quality dies as 'uncirculated' versions of the coin, for collectors to purchase at a premium; these coins are nevertheless legal tender. Some countries issue precious-metal coins which have a currency value indicated on them which is far below the value of the metal the coin contains: these coins are known as " non-circulating legal tender" or "NCLT".


Status by country


Australia

The Australian dollar, comprising notes and coins, is legal tender in Australia. Australian notes are legal tender by virtue of the ''Reserve Bank Act 1959'', s.36(1), without an amount limit. The ''Currency Act 1965'' similarly provides that Australian coins intended for general circulation are also legal tender, but only for the following amounts: * not exceeding 20¢ if 1¢ and/or 2¢ coins are offered, * not exceeding $5 if any of 5¢, 10¢, 20¢ and 50¢ coins are offered, * not exceeding 10 times the face value if the coins offered are greater than 50¢ up to and including $10, * to any value for coins of other denominations above $10.CURRENCY ACT 1965
The 1¢ and 2¢ coins were withdrawn from circulation from February 1992 but remain legal tender. Although the ''Reserve Bank Act 1959'' and the ''Currency Act 1965'' establishes that Australian banknotes and coins have legal tender status, Australian banknotes and coins do not necessarily have to be used in transactions and refusal to accept payment in legal tender is not unlawful. It appears that a provider of goods or services is at liberty to set the commercial terms upon which payment will take place before the "contract" for supply of the goods or services is entered into. If a provider of goods or services specifies other means of payment prior to the contract, then there is usually no obligation for legal tender to be accepted as payment. This is the case even when an existing debt is involved. However, refusal to accept legal tender in payment of an existing debt, where no other means of payment/settlement has been specified in advance, conceivably could have consequences in legal proceedings.
Australia Post Australia Post, formally the Australian Postal Corporation, is the government business enterprise that provides postal services in Australia. The head office of Australia Post is located in Bourke Street, Melbourne, which also serves as a post ...
prohibits the sending of coins or banknotes, of any country, except via
registered post Registered mail is a mail service offered by postal services in many countries which allows the sender proof of mailing via a mailing receipt and, upon request, electronic verification that an article was delivered or that a delivery attempt was ...
."Dangerous and prohibited goods and packaging guide"
, 'Australia Post', Accessed: 31 July 2015


History

In 1901, notes in circulation in Australia consisted of bank notes payable in gold coin and issued by the trading banks, and Queensland Treasury notes. Bank notes circulated in all States except
Queensland ) , nickname = Sunshine State , image_map = Queensland in Australia.svg , map_caption = Location of Queensland in Australia , subdivision_type = Country , subdivision_name = Australia , established_title = Before federation , established_ ...
, but were not legal tender except for a brief period in 1893 in
New South Wales ) , nickname = , image_map = New South Wales in Australia.svg , map_caption = Location of New South Wales in AustraliaCoordinates: , subdivision_type = Country , subdivision_name = Australia , established_title = Before federation , es ...
. There were, however, some restrictions on their issue and other provisions for the protection of the public. Queensland Treasury notes were issued by the Queensland Government and were legal tender in that state. Notes of both categories continued in circulation until 1910, when the
Commonwealth Parliament The Parliament of Australia (officially the Federal Parliament, also called the Commonwealth Parliament) is the legislative branch of the government of Australia. It consists of three elements: the monarch (represented by the governor-ge ...
passed the '' Australian Notes Act 1910'' and the '' Bank Notes Tax Act 1910''. The ''Australian Notes Act 1910'' prohibited the circulation of state notes as money, and the ''Bank Notes Tax Act 1910'' imposed a tax of 10%, per annum, on "all bank notes issued or re-issued by any bank in the Commonwealth after the commencement of this Act, and not redeemed". These Acts effectively put an end to the issue of notes by the trading banks and the Queensland Treasury. ''The Reserve Bank Act 1959'' expressly prohibits persons and states from issuing "a bill or note for the payment of money payable to bearer on demand and intended for circulation".


Canada

In general, Canadian dollar banknotes issued by the Bank of Canada and coins issued under the authority of the
Royal Canadian Mint Act }) is the mint of Canada and a Crown corporation, operating under the ''Royal Canadian Mint Act''. The shares of the Mint are held in trust for the Crown in right of Canada. The Mint produces all of Canada's circulation coins, and manufactures ...
are legal tender in
Canada Canada is a country in North America. Its ten provinces and three territories extend from the Atlantic Ocean to the Pacific Ocean and northward into the Arctic Ocean, covering over , making it the world's second-largest country by tota ...
. However, commercial transactions may legally be settled in any manner agreed by the parties involved with the transactions. For example, convenience stores may refuse $100 bank notes if they feel that would put them at risk of being
counterfeit To counterfeit means to imitate something authentic, with the intent to steal, destroy, or replace the original, for use in illegal transactions, or otherwise to deceive individuals into believing that the fake is of equal or greater value tha ...
victims; however, official policy suggests that the retailers should evaluate the impact of that approach. In the case that no mutually acceptable form of payment can be found for the tender, the parties involved should seek legal advice. Under the ''Currency Act'', there are limits to the value of a transaction for which only coins are used. A payment in coins is a legal tender for no more than the following amounts for the following denominations of coins: # $40 if the denomination is $2 to $10, # $25 if the denomination is $1, # $10 if the denomination is 10c to $1, # $5 if the denomination is 5c, and # 25c if the denomination is 1c. In the case of coins of a denomination greater than $10, a payment is a legal tender for no more than the value of a single coin of that denomination. Where more than one amount is payable by one person to another on the same day under one or more obligations, the total of those amounts is deemed to be one amount due and payable on that day.


China

In the People's Republic of China, the official currency renminbi serves as the unlimited legal tender for all transactions. It is by law that any public institution or individual must not refuse using the currency to settle public or private domestic owing.


El Salvador

In June 2021,
El Salvador El Salvador (; , meaning " The Saviour"), officially the Republic of El Salvador ( es, República de El Salvador), is a country in Central America. It is bordered on the northeast by Honduras, on the northwest by Guatemala, and on the south by ...
became the first country to accept
Bitcoin Bitcoin ( abbreviation: BTC; sign: ₿) is a decentralized digital currency that can be transferred on the peer-to-peer bitcoin network. Bitcoin transactions are verified by network nodes through cryptography and recorded in a public di ...
as legal tender, after the Legislative Assembly had voted 62–22 to pass a bill submitted by President Nayib Bukele classifying the
cryptocurrency A cryptocurrency, crypto-currency, or crypto is a digital currency designed to work as a medium of exchange through a computer network that is not reliant on any central authority, such as a government or bank, to uphold or maintain it. It ...
as such.


Eurozone

Euro coins and banknotes became legal tender in most countries of the
Eurozone The euro area, commonly called eurozone (EZ), is a currency union of 19 member states of the European Union (EU) that have adopted the euro ( €) as their primary currency and sole legal tender, and have thus fully implemented EMU polic ...
on 1 January 2002. Although one side of the coins is used for different national marks for each country, all coins and all banknotes are legal tender throughout the
eurozone The euro area, commonly called eurozone (EZ), is a currency union of 19 member states of the European Union (EU) that have adopted the euro ( €) as their primary currency and sole legal tender, and have thus fully implemented EMU polic ...
. Although some eurozone countries do not put 1 cent and 2 cent coins into general circulation (prices in those countries are by general understanding always rounded to whole multiples of 5 cent), 1 cent and 2 cent coins from other eurozone countries remain legal tender in those countries. Council Regulation (EC) No 974/98 limits the number of coins that can be offered for payment to fifty. Governments that issue the coins must establish the euro as the only legal tender. Due to variations on the legislative meaning of legal tender in various member states and the ability of contract law to overrule the status of legal tender, it is possible for merchants to choose to refuse to accept euro banknotes and coins within specific countries within the Eurozone. For example, the Netherlands, Italy, Belgium, Finland, and Ireland have ''de jure'' or ''de facto'' removed the use of 1 cent and 2 cent coins and adopted cash rounding to the nearest multiple of 5 cents. National laws may also impose restrictions as to maximal amounts that can be settled by coins or notes.
Kosovo Kosovo ( sq, Kosova or ; sr-Cyrl, Косово ), officially the Republic of Kosovo ( sq, Republika e Kosovës, links=no; sr, Република Косово, Republika Kosovo, links=no), is a partially recognised state in Southeast Eur ...
and
Montenegro ) , image_map = Europe-Montenegro.svg , map_caption = , image_map2 = , capital = Podgorica , coordinates = , largest_city = capital , official_languages = ...
, which are not a member of the European Union, Eurozone nor does it have a formal monetary agreement with the EU, unilaterally adopted the euro in 2002 as its ''de facto'' domestic currency to ensure monetary stability and to continue to avoid the high/hyper inflation seen in preceding decades: this means that the euro is not a legal tender there, however it is treated as such by the government and the population.


France

Legal tender was enacted the first time for gold and silver coins in the French Penal Code of 1807 (art. 475, 11°). In 1870, legal tender was extended to all notes of the
Banque de France The Bank of France (French: ''Banque de France''), headquartered in Paris, is the central bank of France. Founded in 1800, it began as a private institution for managing state debts and issuing notes. It is responsible for the accounts of the Fr ...
. Anyone refusing such coins for their whole value would be prosecuted (French Penal Code art. R. 642-3).


Republic of Ireland

According to the Economic and Monetary Union Act, 1998 of the
Republic of Ireland Ireland ( ga, Éire ), also known as the Republic of Ireland (), is a country in north-western Europe consisting of 26 of the 32 Counties of Ireland, counties of the island of Ireland. The capital and largest city is Dublin, on the eastern ...
which replaced the legal tender provisions that had been re-enacted in Irish legislation from previous British enactments, "No person, other than the Central Bank of Ireland and such persons as may be designated by the Minister by order, shall be obliged to accept more than 50 coins denominated in euro or in cent in any single transaction."


History

The Decimal Currency Act, 1970 governed legal tender prior to the adoption of the euro and laid down the analogous provisions as in United Kingdom legislation (all inherited from previous UK law), namely: coins denominated above 10 pence became legal tender for payment not exceeding £10, coins denominated not more than 10 pence became legal tender for payment not exceeding £5, and bronze coins became legal tender for payment not exceeding 20 pence.


Republic of India

The
Indian rupee The Indian rupee (symbol: ₹; code: INR) is the official currency in the republic of India. The rupee is subdivided into 100 '' paise'' (singular: ''paisa''), though as of 2022, coins of denomination of 1 rupee are the lowest value in use wher ...
is the ''de facto'' legal tender currency in
India India, officially the Republic of India ( Hindi: ), is a country in South Asia. It is the seventh-largest country by area, the second-most populous country, and the most populous democracy in the world. Bounded by the Indian Ocean on the ...
. The Indian rupee is also legal tender in
Nepal Nepal (; ne, नेपाल ), formerly the Federal Democratic Republic of Nepal ( ne, सङ्घीय लोकतान्त्रिक गणतन्त्र नेपाल ), is a landlocked country in South Asia. It is ma ...
and
Bhutan Bhutan (; dz, འབྲུག་ཡུལ་, Druk Yul ), officially the Kingdom of Bhutan,), is a landlocked country in South Asia. It is situated in the Eastern Himalayas, between China in the north and India in the south. A mountai ...
, but the Nepalese rupee and Bhutanese ngultrum are not legal tender in India. Both the Nepalese rupee and Bhutanese ngultrum are pegged with the Indian rupee. The Indian rupee used to be an official currency of several other countries, including the
Straits Settlements The Straits Settlements were a group of British territories located in Southeast Asia. Headquartered in Singapore for more than a century, it was originally established in 1826 as part of the territories controlled by the British East India Co ...
(now
Singapore Singapore (), officially the Republic of Singapore, is a sovereign island country and city-state in maritime Southeast Asia. It lies about one degree of latitude () north of the equator, off the southern tip of the Malay Peninsula, borde ...
and parts of
Malaysia Malaysia ( ; ) is a country in Southeast Asia. The federation, federal constitutional monarchy consists of States and federal territories of Malaysia, thirteen states and three federal territories, separated by the South China Sea into two r ...
),
Iraq Iraq,; ku, عێراق, translit=Êraq officially the Republic of Iraq, '; ku, کۆماری عێراق, translit=Komarî Êraq is a country in Western Asia. It is bordered by Turkey to Iraq–Turkey border, the north, Iran to Iran–Iraq ...
,
Kuwait Kuwait (; ar, الكويت ', or ), officially the State of Kuwait ( ar, دولة الكويت '), is a country in Western Asia. It is situated in the northern edge of Eastern Arabia at the tip of the Persian Gulf, bordering Iraq to the no ...
,
Bahrain Bahrain ( ; ; ar, البحرين, al-Bahrayn, locally ), officially the Kingdom of Bahrain, ' is an island country in Western Asia. It is situated on the Persian Gulf, and comprises a small archipelago made up of 50 natural islands and an ...
,
Qatar Qatar (, ; ar, قطر, Qaṭar ; local vernacular pronunciation: ), officially the State of Qatar,) is a country in Western Asia. It occupies the Qatar Peninsula on the northeastern coast of the Arabian Peninsula in the Middle East; it ...
, the Trucial States (now the UAE),
Oman Oman ( ; ar, عُمَان ' ), officially the Sultanate of Oman ( ar, سلْطنةُ عُمان ), is an Arabian country located in southwestern Asia. It is situated on the southeastern coast of the Arabian Peninsula, and spans the mouth of ...
, Aden Colony and Aden Protectorate (now parts of
Yemen Yemen (; ar, ٱلْيَمَن, al-Yaman), officially the Republic of Yemen,, ) is a country in Western Asia. It is situated on the southern end of the Arabian Peninsula, and borders Saudi Arabia to the north and Oman to the northeast an ...
), British Somaliland, British East Africa, and
Zanzibar Zanzibar (; ; ) is an insular semi-autonomous province which united with Tanganyika in 1964 to form the United Republic of Tanzania. It is an archipelago in the Indian Ocean, off the coast of the mainland, and consists of many small islan ...
. In 1837, the Indian rupee was made the sole official currency of the Straits Settlements, as it was administered as a part of India. In 1845, the British replaced the Indian rupee with the Straits dollar after administration of the Straits Settlements separated from India earlier in that same year. After partition of India and Pakistan in 1947, the
Pakistani rupee The Pakistani rupee ( ur, / ALA-LC: ; currency symbol, sign: Re (singular) and Rs (plural); ISO 4217, ISO code: PKR) is the official currency of Pakistan since 1948. The coins and notes are issued and controlled by the central bank, namely St ...
came into existence, initially using Indian coins and Indian currency notes simply overstamped with the word "Pakistan". New coins and banknotes were issued in 1948. The Gulf rupee, also known as the Persian Gulf rupee (XPGR), was introduced by the
Government of India The Government of India ( ISO: ; often abbreviated as GoI), known as the Union Government or Central Government but often simply as the Centre, is the national government of the Republic of India, a federal democracy located in South Asia, ...
as a replacement for the Indian rupee for circulation exclusively outside the country with the
Reserve Bank of India The Reserve Bank of India, chiefly known as RBI, is India's central bank and regulatory body responsible for regulation of the Indian banking system. It is under the ownership of Ministry of Finance, Government of India. It is responsible f ...
Amendment Act of 1 May 1959. This creation of a separate currency was an attempt to reduce the strain put on India's foreign reserves by gold smuggling. Kuwait and Bahrain eventually replaced the Gulf rupee with their own currencies (the Kuwaiti dinar and the Bahraini dinar) after gaining independence from Britain in 1961 and 1965, respectively. On 6 June 1966, India devalued the rupee. To avoid following this devaluation, several of the states using the rupee adopted their own currencies. Qatar and most of the Trucial States adopted the Qatar and Dubai riyal, whilst Abu Dhabi adopted the Bahraini dinar. Only Oman continued to use the Gulf rupee until 1970, with the government backing the currency at its old peg to the pound. Oman later replaced the Gulf rupee with its own rial in 1970. On 8 November 2016,
Prime Minister A prime minister, premier or chief of cabinet is the head of the cabinet and the leader of the ministers in the executive branch of government, often in a parliamentary or semi-presidential system. Under those systems, a prime minister is ...
Narendra Modi Narendra Damodardas Modi (; born 17 September 1950) is an Indian politician serving as the List of Prime Ministers of India, 14th and current Prime Minister of India since 2014. Modi was the List of chief ministers of Gujarat, Chief Minist ...
announced that existing INR 500 and INR 1000 banknotes would no longer be accepted as legal tender with a view to curb counterfeiting, tax evasion and the
parallel economy A black market, underground economy, or shadow economy is a clandestine market or series of transactions that has some aspect of illegality or is characterized by noncompliance with an institutional set of rules. If the rule defines the se ...
. The
Reserve Bank of India The Reserve Bank of India, chiefly known as RBI, is India's central bank and regulatory body responsible for regulation of the Indian banking system. It is under the ownership of Ministry of Finance, Government of India. It is responsible f ...
outlined a scheme for holders of such banknotes to either deposit them into their bank accounts for full, unlimited value, or to exchange the banknotes for new, subject to a cap.


New Zealand

New Zealand New Zealand ( mi, Aotearoa ) is an island country in the southwestern Pacific Ocean. It consists of two main landmasses—the North Island () and the South Island ()—and over 700 List of islands of New Zealand, smaller islands. It is the ...
has a complex history of legal tender. English law applied, as applicable to local circumstances, either from 6 January 1840 (when the Governor of New South Wales by proclamation annexed New Zealand) or from 14 January 1840 (when Captain Hobson (of the Royal Navy) was sworn in as Lieutenant-Governor of New Zealand). The English Laws Act 1858 subsequently confirmed that English legislation passed prior to 14 January 1840 was and had been the law of New Zealand, as applicable to local circumstances. The (UK) Coinage Act 1816 therefore applied and British coins were confirmed as legal tender in
New Zealand New Zealand ( mi, Aotearoa ) is an island country in the southwestern Pacific Ocean. It consists of two main landmasses—the North Island () and the South Island ()—and over 700 List of islands of New Zealand, smaller islands. It is the ...
. (Unusually, until 1989, the Reserve Bank (established in 1934) did not have the right to issue coins as legal tender. Coins had to be issued by the Minister of Finance.) The history of bank notes in New Zealand was considerably more complex. In 1840 the Union Bank of Australia started issuing bank notes under provisions of British law, but these were not automatically legal tender. In 1844 ordinances were passed making the Union Bank banknotes legal tender and authorizing the government to issue debentures in small denominations, thus creating two sets of legal tender. These debentures were circulated but were traded at a discount to their face value because of distrust of the colonial government amongst the settler population. In 1845 the British Colonial office disallowed the Ordinance and the debentures were recalled, not without first causing a
panic Panic is a sudden sensation of fear, which is so strong as to dominate or prevent reason and logical thinking, replacing it with overwhelming feelings of anxiety and frantic agitation consistent with an animalistic fight-or-flight reac ...
among holders. In 1847 the Colonial Bank of Issue became the only issuer of legal tender. In 1856, however, the Colonial Bank of Issue was disbanded; and through the Paper Currency Act 1856 the Union Bank was confirmed once again as an issuer of legal tender. The Act also authorized the Oriental Bank to issue legal tender - but this bank ceased operations in 1861. Between 1861 and 1874, a number of other banks including the Bank of New Zealand, the Bank of New South Wales, the National Bank of New Zealand and the Colonial Bank of New Zealand were created by Acts of Parliament and authorized to issue bank-notes backed by gold, however these notes were not legal tender. The 1893 Bank Note Issue Act allowed the government to declare a bank's right to issue legal tender. This enabled the government to make such a declaration to assist the Bank of New Zealand when in 1895 the bank encountered financial difficulties that could have led to its failure. In 1914 the Banking Amendment Act gave legal-tender status to bank notes from any issuer and removed the requirement that banks authorized to issue bank notes must redeem them on demand for gold (the
gold standard A gold standard is a Backed currency, monetary system in which the standard economics, economic unit of account is based on a fixed quantity of gold. The gold standard was the basis for the international monetary system from the 1870s to the ...
). In 1933 the Coinage Act authorized a specific New Zealand coinage and removed legal-tender status from British coins. In the same year the Reserve Bank of New Zealand was established. The bank was given a monopoly on the issue of legal tender. The Reserve Bank also provided a mechanism through which the other issuers of legal tender could phase out their bank notes. These banknotes were convertible into British legal tender on demand at the Reserve Bank and remained so until the 1938 Sterling Exchange Suspension Notice that suspended provisions of a 1936 amendment of the 1933 Reserve Bank of New Zealand Act. In 1964 the Reserve Bank of New Zealand Act re-stated that only notes issued by the Reserve Bank were legal tender. The Act also ended the right of individuals to redeem their bank notes for coin, effectively ending the distinction between coin and notes in New Zealand. The Act came into force in 1967, establishing as legal tender all New Zealand dollar five-dollar banknotes and greater, all decimal coins, the pre-decimal sixpence, the shilling, and the florin. Also passed in 1964 was the Decimal Currency Act, which created the basis for a decimal currency, introduced in 1967. 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 older-style silver coins were legal tender until October 2006, after which only the new 10c, 20c and 50c coins, introduced in August 2006, remained legal.


Norway

The
Norwegian krone The krone (, abbreviation: kr (also NKr for distinction); code: NOK), plural ''kroner'', is currency of the Kingdom of Norway (including Svalbard). Traditionally known as the Norwegian crown in English. It is nominally subdivided into 100 ' ...
(NOK) is legal tender in
Norway Norway, officially the Kingdom of Norway, is a Nordic country in Northern Europe, the mainland territory of which comprises the western and northernmost portion of the Scandinavian Peninsula. The remote Arctic island of Jan Mayen and t ...
according to the Central Bank ( no, Sentralbankloven) of 24 May 1985. However, no-one is obliged to accept more than 25 coins of each denomination (of which currently 1, 5, 10 and 20 NOK denominations are in common circulation).


Singapore and Brunei

Singapore Singapore (), officially the Republic of Singapore, is a sovereign island country and city-state in maritime Southeast Asia. It lies about one degree of latitude () north of the equator, off the southern tip of the Malay Peninsula, borde ...
and
Brunei Brunei ( , ), formally Brunei Darussalam ( ms, Negara Brunei Darussalam, Jawi alphabet, Jawi: , ), is a country located on the north coast of the island of Borneo in Southeast Asia. Apart from its South China Sea coast, it is completely sur ...
have a Currency Interchangeability Agreement since 12 June 1967. Under the agreement,
Singapore dollar The Singapore dollar (currency sign, sign: S$; ISO 4217, code: SGD) is the official currency of the Republic of Singapore. It is divided into 100 cent (currency), cents. It is normally abbreviated with the dollar sign $, or S$ to distinguish ...
and
Brunei dollar The Brunei dollar (sign: B$, Malay: ''ringgit Brunei'', currency code: ''BND''), has been the currency of the Sultanate of Brunei since 1967. It is normally abbreviated with the dollar sign $, or alternatively B$ to distinguish it from o ...
are exchangeable at par without charge in both countries. As such, the currency of one country is accepted in the other country as "customary tender".


Switzerland and Liechtenstein

The Swiss franc is the only legal tender in Switzerland. Any payment consisting of up to 100 Swiss coins is legal tender; banknotes are legal tender for any amount. The sixth series of Swiss bank notes from 1976, recalled by the National Bank in 2000, and the eighth series from the 1990's, withdrawn in 2021, are both no longer legal tender, but banknotes can be exchanged by the Swiss National Bank or other authorized banks for current notes without limitation as to time. The Swiss franc is also the legal tender of the Principality of
Liechtenstein Liechtenstein (), officially the Principality of Liechtenstein (german: link=no, Fürstentum Liechtenstein), is a German language, German-speaking microstate located in the Alps between Austria and Switzerland. Liechtenstein is a semi-constit ...
, which is joined to Switzerland in a customs union. The Swiss franc is also the currency used for administrative and accounting purposes by most of the numerous international organisations that are headquartered in Switzerland.


Taiwan

The New Taiwan dollar issued by the Central Bank of the Republic of China (Taiwan) is legal tender for all payments within the territory of the
Republic of China Taiwan, officially the Republic of China (ROC), is a country in East Asia, at the junction of the East and South China Seas in the northwestern Pacific Ocean, with the People's Republic of China (PRC) to the northwest, Japan to the northea ...
,
Taiwan Taiwan, officially the Republic of China (ROC), is a country in East Asia, at the junction of the East and South China Seas in the northwestern Pacific Ocean, with the People's Republic of China (PRC) to the northwest, Japan to the northe ...
. However, since 2007, candidates to become civil servants in
elections in the Republic of China There are eleven types of elections in Taiwan which, since 2012, have been unified into general and local elections, each held every four years, typically in January and November respectively. There may also be by-elections. Electoral systems inc ...
may no longer pay any deposit in coinage.


Thailand

Series 2 banknotes first issued in 1925 during the reign of Rama VI and continuing into the reign of Rama VII added the legend,
th, สัญญาจะจ่ายเงินให้แก่ผู้นำบัตรนี้มาขึ้นเป็นเงินตราสยาม ''Promise to pay'' (silver to) ''bearer on demand in'' (silver) ''currency of Siam'';
later changed in 1928 to be in line with The Currency Act, B.E. 2471 to
''This note is legal tender '' (
literal translation Literal translation, direct translation or word-for-word translation, is a translation of a text done by translating each word separately, without looking at how the words are used together in a phrase or sentence. In Translation studies, trans ...
, ''silver in payment of debt'') ''according to law''.
The front has a guilloche design with twelve rays, and the back, depictions of the
Royal Ploughing Ceremony The Royal Ploughing Ceremony ( km, ព្រះរាជពិធីបុណ្យច្រត់ព្រះនង្គ័ល ; si, වප් මඟුල් ''Vap Magula;'' th, พระราชพิธีจรดพระนังคั ...
. These were printed in 6 denominations – 1, 5, 10, 20,100 and 1000 baht – in two types printed by
De La Rue De La Rue plc (, ) is a British company headquartered in Basingstoke, England, that designs and produces banknotes, secure polymer substrate and banknote security features (including security holograms, security threads and security print ...
of London, England.


United Kingdom

In the UK legal tender has a very narrow and technical meaning in the settlement of debts: a debtor cannot successfully be sued for non-payment if they pay the exact amount (change cannot be demanded) into court in legal tender. Legal tender is solely for the guaranteed settlement of debts and does not affect any party's right of refusal of service in any transaction. In the 19th century, gold coins were legal tender to any amount, but silver coins were not legal tender for sums over 2 pounds nor bronze for sums over 1 shilling. This provision was retained in revised form at the introduction of decimal currency, and the Coinage Act 1971 laid down that coins denominated above 10 pence became legal tender for payment not exceeding 10 pounds, non-bronze coins denominated not more than 10 pence became legal tender for payment not exceeding 5 pounds, and bronze coins became legal tender for payment not exceeding 20 pence. Throughout the
United Kingdom The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom (UK) or Britain, is a country in Europe, off the north-western coast of the European mainland, continental mainland. It comprises England, Scotlan ...
, coins valued 1 pound, 2 pounds, and 5 pounds
sterling Sterling may refer to: Common meanings * Sterling silver, a grade of silver * Sterling (currency), the currency of the United Kingdom ** Pound sterling, the primary unit of that currency Places United Kingdom * Stirling, a Scottish city w ...
are legal tender in unlimited amounts. Twenty pence pieces and fifty pence pieces are legal tender in amounts up to 10 pounds; five pence pieces and ten pence pieces are legal tender in amounts up to 5 pounds; and pennies and two pence coins are legal tender in amounts up to 20 pence. In accordance with the Coinage Act 1971, gold sovereigns are also legal tender for any amount. Although it is not specifically mentioned on them, the face values of gold coins are 50p; £1; £2; and £5, a mere fraction of their worth as bullion. Five pound coins, although legal tender, are intended as souvenirs and are almost never seen in circulation. To meet the legal definition of legal tender, the exact amount due must be tendered; no change can be demanded. Maundy money is legal tender but may not be accepted by retailers and is worth much more than face value due to its rarity value and silver content. Bank of England notes are legal tender in
England and Wales England and Wales () is one of the three legal jurisdictions of the United Kingdom. It covers the constituent countries England and Wales and was formed by the Laws in Wales Acts 1535 and 1542. The substantive law of the jurisdiction is ...
and are issued in the denominations of £5, £10, £20 and £50. They can always be redeemed at the Bank of England even if discontinued. Banknotes issued by Scottish and Northern Irish banks are not legal tender anywhere but are widely accepted with agreement between parties. In a 1976 case, ''
Miliangos v George Frank Ltd ''Miliangos v George Frank Ltd'', 976AC 443 is a leading decision of the House of Lords enforcement of debts. The case created the Miliangos rule that allows creditors under a contract to obtain judgment under a foreign currency. The Lords stat ...
'', the
House of Lords The House of Lords, also known as the House of Peers, is the upper house of the Parliament of the United Kingdom. Membership is by appointment, heredity or official function. Like the House of Commons, it meets in the Palace of Westminster ...
established that the English courts could order debts to be paid in currencies other than sterling under certain circumstances, overturning two centuries of precedent.


Scotland

Coins are legal tender in Scotland, but no banknotes are. Scottish banknotes are legal currency and widely accepted, but are not legal tender anywhere in the UK.


United States

Before the
Civil War A civil war or intrastate war is a war between organized groups within the same state (or country). The aim of one side may be to take control of the country or a region, to achieve independence for a region, or to change government polic ...
(1861 to 1865), silver coins were legal tender only up to the sum of $5. Before 1853, when U.S. silver coins were reduced in weight 7%, coins had exactly their value in metal (from 1830 to 1852). Two silver 50 cent coins had exactly $1 worth of silver. A gold U.S. dollar of 1849 had $1 worth of gold. With the flood of gold coming out of the California mines in the early 1850s, the price of silver rose (gold went down). Thus, 50 cent coins of 1840 to 1852 were worth 53 cents if melted down. The government could increase the value of the gold coins (expensive) or reduce the size of all U.S. silver coins. With the reduction of 1853, a 50-cent coin now had only 48 cents of silver. This is the reason for the $5 limit of silver coins as legal tender; paying somebody $100 in the new silver coins would be giving them $96 worth of silver. Most people preferred bank check or gold coins for large purchases. During the early
American Civil War The American Civil War (April 12, 1861 – May 26, 1865; also known by other names) was a civil war in the United States. It was fought between the Union ("the North") and the Confederacy ("the South"), the latter formed by state ...
, the federal government first issued United States Notes (the first greenback notes), which were not redeemable in gold and silver coins but could be used to pay "all dues" to the federal government. Since land purchases and duties on imports were payable only in gold or the new Demand Notes, the Demand Notes were bought by importers and land speculators for about 97 cents on the gold dollar and never lost value. 1862 greenbacks ( Legal Tender Notes) at first traded for 97 cents on the dollar but gained/lost value depending on fortunes of the Union army. The value of Legal Tender Greenbacks swung wildly but trading was from 85 to 33 cents on the gold dollar. This resulted in a situation in which the greenback "Legal Tender" notes of 1862 were
fiat Fiat Automobiles S.p.A. (, , ; originally FIAT, it, Fabbrica Italiana Automobili di Torino, lit=Italian Automobiles Factory of Turin) is an Italian automobile manufacturer, formerly part of Fiat Chrysler Automobiles, and since 2021 a subsidiary ...
, and so gold and silver were held and paper circulated at a discount because of Gresham's law. The 1861 Demand Notes were a huge success but robbed the customs house of much needed gold coin (interest on most bonds back then was paid in gold). A money-strapped Congress, which had to pay for the war, eventually adopted the Legal Tender Act of 1862, issuing United States Notes backed only by treasury securities, and compelled the people to accept the new notes at a discount; prices rose except for those who had gold and/or silver coins. Following the Civil War, paper currency was disputed as to whether it must be accepted as payment. In 1869, Hepburn v. Griswold found that Henry Griswold would not have to accept paper currency because it could not truly be "legal tender" and was unconstitutional as a legally enforceable means to pay debts. This led to the Legal Tender Cases in 1870, which overturned the previous ruling and established the paper currency as constitutional and proper legal tender that must be accepted in all situations. With the 1884 Supreme Court ruling in '' Juilliard v. Greenman'', the "Supreme Court ruled that Congress had the right to issue notes to be legal tender for the payment of public and private debt. Legal-tender notes are treasury notes or banknotes that, in the eyes of the law, must be accepted in the payment of debts." The ruling in the Legal Tender Cases (which include ''Juilliard v. Greenman'') led later courts to "support the federal government's invalidation of gold clauses in private contracts in the 1930s." On the other hand, coins made of gold or silver may not necessarily be legal tender, if they are not fiat money in the jurisdiction where they are proffered as payment. The Coinage Act of 1965 states (in part): Contrary to common misconception, there is no federal law stating that a private business, a person, or a government organization must accept currency or coins for payment. Private businesses are free to create their own policies on whether they accept cash, unless there is a specific state law which says otherwise. For example, a bus line may prohibit payment of fares in cents or dollar bills. In addition, movie theaters, convenience stores, and gas stations may refuse to accept large denomination currency as a matter of policy or safety. The principal purpose of that statute is to ensure the nationwide acceptance of U.S. currency, consistent with constitutional language that reserves to Congress the power to create a uniform currency that holds the same value throughout the United States. While the statute provides that U.S. money is legal tender that may be accepted for the payment of debts, it does not require ''acceptance'' of cash payments, nor does it provide that restrictions cannot be imposed upon the acceptance of cash.


Venezuela

On 11 December 2016,
Venezuela Venezuela (; ), officially the Bolivarian Republic of Venezuela ( es, link=no, República Bolivariana de Venezuela), is a country on the northern coast of South America, consisting of a continental landmass and many islands and islets in ...
's government announced demonetisation following almost 500% inflation in the country. People of the country were given 3 days to get rid of the 100 Bolivar notes (most widely used currency) post the introduction of new note of higher denominations. As of 15 June 2017, there has been 7 extensions (one per month) of the legal use of the 100 bolivares bill notes. The 100 Bolivar notes were still legal tender as of 30 December 2017.


See also

*
Currency A currency, "in circulation", from la, currens, -entis, literally meaning "running" or "traversing" is a standardization of money in any form, in use or circulation as a medium of exchange, for example banknotes and coins. A more general ...
* Economy monetization * Gresham's law *
Postage stamp demonetization The demonetization of postage and revenue stamps is the process by which the stamps are rendered no longer valid. In general, stamp demonetization is a rare event, since any unused stamp is effectively equivalent to its face value, and there is no ...
* Standard of deferred payment * Seigniorage


Notes


External links


The Royal Mint – UK Legal Tender Guidelines

The Royal Mint – Legal tender status of stamps in the UK

Act to authorize the Issue of United States Notes, and for the Redemption or Funding thereof, and for Funding the Floating Debt of the United States. 37th Congress, 2d Session, Ch. 33, 12 Stat. 345. [Legal Tender Act]

Act to authorize an additional Issue of United States Notes, and for other purposes. 37th Congress, 2d Session, Ch. 142, 12 Stat. 532 [Second Legal Tender Act]

Act to provide Ways and Means for the Support of the Government. 37th Congress, 3d Session, Ch. 73, 12 Stat. 709 [Third legal Tender Act]
{{DEFAULTSORT:Legal Tender Business law Monetary reform Currency