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Legal tender
Legal tender is a medium of payment recognized by a legal system to be valid for meeting a financial obligation.[1] Paper
currency and coins are common forms of legal tender in many countries. Legal tender is variously defined in different
jurisdictions. Formally, it is anything which when offered in payment extinguishes the debt. Thus, personal cheques, credit
cards, and similar non-cash methods of payment are not usually legal tender. The law does not relieve the debt obligation
until payment is tendered. Coins and banknotes are usually defined as legal tender. Some jurisdictions may forbid or
restrict payment made other than by legal tender. For example, such a law might outlaw the use of foreign coins and bank
notes or require a license to perform financial transactions in a foreign currency.

Generally, designation of a particular form of money as legal tender means "that the designated money is valid payment
for all debts unless there is a specific agreement to the contrary".[2] 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: this is covered by the legal concept known as invitation to treat. Under
the law, United States money as identified above is a valid and legal offer of payment for antecedent debts when tendered
to a creditor. By contrast, federal statutes do not require that someone who is not a pre-existing creditor must accept
currency or coins as payment for goods or services. Private businesses may formulate their own policies on whether to
accept cash unless state law requires otherwise.[3][4]

The right, in many jurisdictions, of a trader to refuse to do business with any person, means a purchaser may not insist on
making a purchase and so declaring a legal tender in law, as anything other than an offered payment for debts already
incurred would not be effective.

Contents
1 Etymology
2 Withdrawal and replacement of legal tender
2.1 Demonetisation
2.2 Withdrawal from circulation
2.3 Cashless society
3 Commemorative issues
4 Status by country
4.1 Australia
4.1.1 History
4.2 Canada
4.3 China
4.4 Eurozone
4.5 France
4.6 Republic of Ireland
4.6.1 Irish history
4.7 India
4.8 New Zealand
4.9 Norway

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4.10 Singapore and Brunei

4.11 Switzerland and Liechtenstein
4.12 Taiwan
4.13 Thailand
4.14 United Kingdom
4.15 United States
4.16 Venezuela
5 See also
6 Notes
7 External links

Etymology
The term "legal tender" is from Middle English tendren, 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).[5]

Withdrawal and replacement of legal tender

Demonetisation
Coins and banknotes may cease to be legal tender if new notes of the same currency replace them or if a new currency is
introduced replacing the former one.[6] Examples of this are:

The United Kingdom, adopting 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 (p, 1p, 2p equal to 1.2d (old pence),
2.4d, 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 ( = 2p), 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 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 replacing the Soviet ruble in the 1990s.
Currencies used in the Eurozone before being replaced by the euro are not legal tender, but all banknotes are
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 November 8, 2016. This action affected 86 percent of all cash in
circulation. The demonetisation action was intended to curb black money, the hoarding of unaccounted cash, and
sponsorship of terrorism, but also led to long queues from bank runs, leaving more than 30 people dead.[7] The old
notes are now being replaced by new 500 and 2000 rupee notes.
Individual coins or banknotes can be demonetised (http://demonetization.in) 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.

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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 28 February 2002. Legally, those coins and banknotes were considered non-decimal sub-divisions of
the euro.

When the Iraqi Swiss dinar ceased to be legal tender in Iraq, it still circulated in the northern Kurdish regions, and despite
lacking government backing, it had a stable market value for more than a decade. This example is often cited to
demonstrate that the value of a currency is not derived purely from its legal status (but this currency would not be legal
tender).

This is also true of the paper money issued by the Confederate States of America during the American Civil War. The
Confederate currency 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 banknotes issued from 1967 onwards (and 1- and 2-dollar notes until 1993) are
still legal tender; however, 1- and 2-cent coins are no longer used in Australia and New Zealand.

Cashless society
A cashless society describes an economic state whereby financial transactions are not conducted with money in the form of
physical banknotes or coins, but rather through the transfer of digital information (usually an electronic representation of
money) between the transacting parties.[8] Cashless societies have existed, based on barter and other methods of exchange,
and cashless transactions have also become possible using digital currencies such as bitcoin. However this article
discusses and focuses on the term "cashless society" in the sense of a move towards, and implications of, a society where
cash is replaced by its digital equivalent - in other words, legal tender (money) exists, is recorded, and is exchanged only in
electronic digital form.

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. 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".
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Status by country

Australia
In Australia, the creation of legal tender, in the form of notes and base metal coins, is the exclusive right of the
Commonwealth (Federal) Government. According to section 115 of the Australian Constitution, "A State shall not coin
money, nor make anything but gold and silver coin a legal tender in payment of debts."[9] Under this provision the Perth
Mint, owned by the Western Australian Government, still produces gold and silver coins with legal tender status, the
Australian Gold Nugget and Australian Silver Kookaburra. These, however, although having the status of legal tender, are
almost never circulated or used in payment of debts, and are mostly considered bullion coins.

Australian notes are legal tender for all amounts, as established by the Reserve Bank Act 1959.[10] Under the provisions of
the Currency Act 1965 Australian coins intended for general circulation, which are now produced at the Royal Australian
Mint in Canberra, 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.[11]
The one cent and two cent coins have been withdrawn from circulation since February 1992 but remain legal tender.[12]

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.[12][13]

Australia Post prohibits the sending of coins or banknotes, of any country, except via Registered Post.[14]

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, but were not legal tender except for a
brief period in 1893 in New South Wales. 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 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 ten per cent, 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".[10]

Canada
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In general, Canadian dollar banknotes issued by the Bank of Canada and coins issued under the authority of the Royal
Canadian Mint Act are legal tender in Canada. 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 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.[15]

As outlined in the Currency Act, there is a limit to the value of a transaction for which one may use only coins.[16] A
payment in coins is a legal tender for no more than the following amounts for the following denominations of coins:

1. forty dollars if the denomination is two dollars or greater but does not exceed ten dollars;
2. twenty-five dollars if the denomination is one dollar;
3. ten dollars if the denomination is ten cents or greater but less than one dollar;
4. five dollars if the denomination is five cents; and
5. twenty-five cents if the denomination is one cent.
In the case of coins of a denomination greater than ten dollars, 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.[17]

Eurozone
Euro coins and banknotes became legal tender in most countries of the Eurozone on January 1, 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. Therefore, it is possible to find Irish euro coins in Greece and Finnish euro coins in Portugal, for instance.
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.[18] 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 (the
Netherlands, Germany, Finland and Ireland).[19] National laws may also impose restrictions as to maximal amounts that
can be settled by coins or notes.

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. Anyone refusing such monies for their whole value would
be prosecuted (French Penal Code art. R. 642-3).

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Republic of Ireland
According to the Economic and Monetary Union Act, 1998 of the Republic of Ireland 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."

Irish 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 British law), namely: coins denominated above 10
pence became legal tender for payment not exceeding 10 pounds, 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.

India
The Indian rupee is the de facto legal tender currency in India. The Indian rupee is also legal tender in Nepal and Bhutan,
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.[20]

The Indian rupee used to be an official currency of other countries, including the Straits Settlements (now Singapore and
parts of Malaysia), Kuwait, Bahrain, Qatar, and the Trucial States (now the UAE).

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 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 as a
replacement for the Indian rupee for circulation exclusively outside the country with the Reserve Bank of India
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.

Two states, 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 November 8, 2016, Prime Minister Narendra Modi 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. War on
corruption by tackling benami properties, black money, cash through demonetization and crackdown on the money
network of the Hurriyat leaders in Jammu & Kashmir could have been possible under the strong and decisive leadership
Of Modi.[21] The Reserve Bank of India 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. [22]

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New Zealand
New Zealand has a complex history of legal tender. English law applied, as applicable to local circumstances, from either 6
January 1840, when the Governor of New South Wales by proclamation annexed New Zealand, or from 14 January 1840
when Captain Hobson Royal Navy was sworn in as Lieutenant-Governor. 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. Unusually, until 1989, the Reserve Bank 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 was considerably more complex. In 1840, the Union Bank 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 authorising 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 by the settler population. In 1845,
the Ordinance was disallowed by the British Colonial office and they were recalled, not without first causing a panic
among holders of the debentures.

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 authorised 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, Bank of New South Wales, National
Bank of New Zealand and Colonial Bank of New Zealand were created by Acts of Parliament and authorised 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 authorised to issue bank notes must redeem them on demand for gold (the gold standard).

In 1933, the Coinage Act created 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 restated 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 dollars
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.

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 older style silver coins were legal tender
until October 2006, after which only the new 10c, 20c and 50c coins, introduced in August 2006, are legal.[23]

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Norway
The Norwegian krone (NOK) is legal tender in Norway according to the Central Bank (Norwegian: Sentralbankloven) of
1985-05-24,[24] 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 and Brunei have a Currency Interchangeability Agreement since 12 June 1967. Under the agreement, Singapore
dollar and Brunei dollar 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".[25]

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.[26]

The sixth series of Swiss bank notes from 1976, recalled by the National Bank in 2000, is no longer legal tender, but can be
exchanged in banks for current notes until April 2020.

The Swiss franc is also the legal tender of the Principality of Liechtenstein, 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.[27] However, since 2007,[28] candidates to become civil servants in
elections in the Republic of China may no longer pay any deposit in coinage.[29]

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,

Thai:

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[30] to

This note is legal tender (literal translation, silver in payment of debt) according to law.

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The front has a guilloche design with twelve rays, and the back, depictions of the Royal Ploughing Ceremony. These were
printed in 6 denominations 1, 5, 10, 20,100 and 1000 bahtin two types printed by De La Rue of London, England.[31]

United Kingdom
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.[32]

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, coins valued 1 pound, 2 pounds, and 5 pounds Sterling 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.[33] In accordance with the Coinage Act 1971,[34] 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.

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 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.[35] Thus legal
tender in Scotland is limited to coin.

United States
Before the Civil War (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 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.

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This resulted in a situation in which the greenback "Legal Tender" notes of 1862 were fiat, 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 if 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.[36]

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."[37] The ruling in the Legal Tender Cases
(which include Juilliard v. Greenman) led to later courts to "support the federal government's invalidation of gold clauses
in private contracts in the 1930s."[38]

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):

United States coins and currency (including Federal reserve notes and circulating notes of Federal reserve
banks and national banks) are legal tender for all debts, public charges, taxes and dues. Foreign gold or silver
coins are not legal tender for debts.

31 U.S.C. 5103 (https://www.law.cornell.edu/uscode/text/31/5103)

There is no federal law stating that a private business, a person, or an organization must accept currency or coins for
payment. Private businesses are free to create their own policies on whether or not 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.[3][4]

Venezuela
On December 11, 2016, the Venezuelan 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 June 15, 2017, there has been 7 extensions (one per month) of the
legal use of the 100 bolivares bill notes.Maduro prorrog la vigencia del billete de 100 hasta el 20 de abril (http://www.elu
niversal.com/noticias/economia/maduro-prorrogo-vigencia-del-billete-100-hasta-abril_644194)

See also
Currency
Gresham's law
Postage stamp demonetization
Standard of deferred payment

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Seigniorage

Notes
1. "Legal Tender Guidelines" (http://www.royalmint.com/Corporate/policies/legal_tender_guidelines.aspx). British Royal
Mint Legal tender refers to that form of money which has been approved by the government as a legal form of
exchange and has been guaranteed by the government to have a legal status to repay debts or exchange against
some good or commodity. Retrieved 2007-09-02.
2. Paul M. Horvitz, Monetary Policy and the Financial System, p. 14, Prentice-Hall, 3rd ed. (1974).
3. "Legal Tender Status" (http://www.treasury.gov/resource-center/faqs/Currency/Pages/legal-tender.aspx). Resource
Center. U.S. Department of the Treasury. 4 January 2011. Retrieved 2017-01-27.
4. "FRB: Is it legal for a business in the United States to refuse cash as a form of payment?" (https://www.federalreserv
e.gov/faqs/currency_12772.htm). Board of Governors of the Federal Reserve System. Federal Reserve System. 17
June 2011. Retrieved 27 January 2017.
5. Definition of tender as verb, in Merriam-Webster (http://www.merriam-webster.com/dictionary/tender). Retrieved July
13, 2009.
6. Cross, Bill (2012). Dollar Default: How the Federal Reserve and the Government Betrayed Your Trust. pp. 1516.
ISBN 9781475261080.
7. http://indianexpress.com/article/india/india-news-india/demonetisation-suicides-heart-attacks-and-even-a-murder-
among-33-deaths-since-decision-4378135/
8. "THE COST OF CASH IN THE UNITED STATES" (http://fletcher.tufts.edu/CostofCash/~/media/Fletcher/Microsites/C
ost%20of%20Cash/CostofCashStudyFinal.pdf) (PDF). The Fletcher School Tufts University. p. 9. Retrieved
17 December 2016.
9. "COMMONWEALTH OF AUSTRALIA CONSTITUTION ACT - SECT 115 States not to coin money" (http://www.austlii.
edu.au/au/legis/cth/consol_act/coaca430/s115.html). Austlii.edu.au. Retrieved 2010-05-03.
10. Reserve Bank Act 1959 (http://www.comlaw.gov.au/Series/C2004A07384)
11. CURRENCY ACT 1965 (http://www.austlii.edu.au/au/legis/cth/consol_act/ca1965120/)
12. "RBA Banknotes: Legal Tender" (http://banknotes.rba.gov.au/legal/legal-tender/). Rba.gov.au.
13. "Reserve Bank of Australia - Home Page" (http://www.rba.gov.au/). Rba.gov.au. Retrieved 2010-05-03.
14. "Dangerous and prohibited goods and packaging guide" (http://auspost.com.au/media/documents/Dangerous-and-pro
hibited-goods-guide-Dec2014.pdf), 'Australia Post', Accessed: 31 July 2015
15. "Currency Counterfeiting - Frequently Asked Questions" (http://www.rcmp-grc.gc.ca/count-contre/faq-eng.htm).
Rcmp-grc.gc.ca. 2006-07-10. Retrieved 2010-05-03.
16. "Canada's currency act" (http://laws-lois.justice.gc.ca/eng/acts/C-52/index.html). Retrieved 2011-07-08.
17. "" (http://www.pbc.gov.cn/rhwg/000101f.htm). www.pbc.gov.cn. Retrieved 2016-02-13.
18. "Council Regulation (EC) No 974/98 of 3 May 1998 on the introduction of the euro" (http://eur-lex.europa.eu/LexUriSe
rv/LexUriServ.do?uri=OJ:L:1998:139:0001:0005:EN:PDF) (PDF). Official Journal of the European Communities.
Luxembourg. 41 (L 139): 15. 1998-05-11. ISSN 0378-6978 (https://www.worldcat.org/issn/0378-6978).
OCLC 104948742 (https://www.worldcat.org/oclc/104948742). Retrieved 2009-06-03.
19. Euro Legal Tender Expert Group. "Report. Euro legal tender expert group (ELTEG)" (http://ec.europa.eu/economy_fin
ance/articles/euro/documents/elteg_en.pdf) (PDF). European Commission. Retrieved 2016-06-17.
20. "Area handbook Series/ Bhutan (Nepal and Bhutan) / Glossary" (http://www.country-data.com/frd/cs/bhutan/bt_glos.ht
ml). Country-data.com. Retrieved 2010-05-03.
21. " 'The reputation of India' " (http://indianexpress.com/article/opinion/the-reputation-of-india-as-a-soft-state-is-over/).
indianexpress.com.
22. http://finmin.nic.in/172521.pdf
23. "Reserve Bank of New Zealand: Bulletin Vol. 66 No. 1" (http://www.rbnz.govt.nz/research/bulletin/2002_2006/2003ma
r66_1matthews.pdf) (PDF). Retrieved 2010-05-03.

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24. "Law regarding Norges Bank and monetary issues of 1985-05-24 no. 28, 14 (in Norwegian)" (http://www.lovdata.no/
all/hl-19850524-028.html#14).
25. "Currency Interchangeability Agreement - Brunei Notes and Coins" (http://www.mas.gov.sg/currency/currency-interch
angeability-agreement-with-brunei.aspx). Monetary Authority of Singapore. Retrieved 2014-11-24.
26. Art. 3 of the Swiss law on Monetary Unit and means of payment. German (http://www.admin.ch/ch/d/sr/941_10/a3.ht
ml), French (http://www.admin.ch/ch/f/rs/941_10/a3.html) and Italian (http://www.admin.ch/ch/i/rs/941_10/a3.html)
versions.
27. Article 13 of The Central Bank of the Republic of China (Taiwan) Act (http://law.moj.gov.tw/Eng/LawClass/LawSearch
No.aspx?PC=G0410001&DF=&SNo=13).
28. Legislative History of the Civil Servants Election And Recall Act (http://law.moj.gov.tw/Eng/LawClass/LawHistory.asp
x?PCode=D0020010), the 21st version: "The full text of 134 Articles amended and promulgated by President Order
Hua-Tsung (1) Yi-Tzu No. 09500075641 on November 7, 2007 and enforced accordingly".
29. Article 32 of the Civil Servants Election And Recall Act (http://law.moj.gov.tw/Eng/LawClass/LawSearchNo.aspx?PC=
D0020010&DF=&SNo=32).
30. (http://www.ratchakitcha.soc.go.th/DATA/PDF/2471/A/25.PDF) (PDF) (in Thai).
- .. . Retrieved 12 September 2012.
31. "Banknotes, Series 2" (http://www.bot.or.th/English/Banknotes/HistoryANdSeriesOfBanknotes/Pages/Banknote_Serie
s02.aspx.htm). Banknotes > History and Series of Banknotes >. Bank of Thailand. February 23, 2012. "The design
was printed on both sides...."
32. Legal Tender Guidelines (http://www.royalmint.com/corporate/policies/legal_tender_guidelines.aspx). The Royal Mint.
33. "Legal Tender Guidelines" (http://www.royalmint.com/corporate/policies/legal_tender_guidelines.aspx). Royal Mint.
Retrieved 2009-03-09.
34. Text of the Coinage Act 1971 (http://www.legislation.gov.uk/ukpga/1971/24/contents) as in force today (including any
amendments) within the United Kingdom, from legislation.gov.uk Last accessed:3 May 2011
35. "Bank of England Bank Notes FAQ" (http://www.bankofengland.co.uk/banknotes/about/faqs.htm#16). Bank of
England.
36. Hammond, Bray. Banks and Politics in America. Princeton: Princeton University Press, 1991. pp. 108-109
37. Allen, Larry. The Encyclopedia of Money. Santa Barbara: ABC CLIO, 2009. pp. 250-251
38. Zywicki, Todd. "Article I, Section 8" in The Heritage Guide to the Constitution. Regnery Publishing, 2014. p. 147

External links
The Royal Mint - UK Legal Tender Guidelines (http://www.royalmint.com/aboutus/policies-and-guidelines/legal-tender-
guidelines)
The Royal Mint - Legal tender status of stamps in the UK (http://blog.royalmint.com/are-stamps-legal-tender/)
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] (https://fraser.
stlouisfed.org/scribd/?title_id=1107&filepath=/docs/historical/congressional/legal-tender-act-1862.pdf)
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] (https://fraser.stlouisfed.org/scribd/?title_id=1119&filepath=/docs/historic
al/congressional/second-legal-tender-act.pdf)
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] (https://fraser.stlouisfed.org/scribd/?title_id=1138&filepath=/docs/historical/congressional/third
-legal-tender-act.pdf)

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