The Australian dollar, consisting of banknotes and coins, is legal tender in Australia. Australian banknotes are legal tender under the Reserve Bank Act 1959, p.36(1),[12] with no limit on the amount. The Currency Act 1965[13] also provides that Australian coins intended for general circulation are also legal tender, but only in the following amounts: After the Civil War, paper money was controversial as to whether it should be accepted as payment. In 1869, Hepburn v. Griswold concluded that Henry Griswold did not have to accept paper money because it could not really be «legal tender» and that it was unconstitutional as a legally enforceable means of paying debts. This led to the legal tender cases in 1870, which overturned the previous judgment and established fiat money as a constitutional and appropriate legal tender that must be accepted in all situations. [44] On December 11, 2016, the Venezuelan government announced demonetization after the country reached inflation of nearly 500%. The people of the country had 3 days to get rid of the 100 bolivar notes (the most used currency) after the introduction of new notes of higher value. Until June 15, 2017, there were 7 renewals (one per month) of the legal use of 100 bolivar notes. The 100 bolivar notes were still legal tender as of 30 December 2017. Federal Reserve notes and circulation coins are the two most commonly used legal tender currencies in the United States.
The Federal Reserve Act of 1913 replaced all other fiat currencies with Federal Reserve banknotes. They are made of linen and cotton, so their real value is much lower than their monetary value. This is ideal for legal tender. You never want the intrinsic value of the offer to be greater than the value assigned. Sometimes monetary issues such as commemorative coins or transfer slips may be issued that are not intended for public circulation, but are still legal tender. An example of such a currency is the Maundy currency. Some currency issuers, notably Scottish banks, issue special commemorative notes for normal circulation (although no Scottish or Northern Irish notes are legal tender in the United Kingdom). In addition, some standard coins are minted on higher-value dies as «non-circulating» versions of the coin, which collectors can purchase for an additional fee. These documents are nevertheless legal tender. Some countries issue precious metal coins on which a monetary value is indicated well below the value of the metal containing the coin: these coins are called «non-circulating legal tender» or «NCLT».
Maundy currency is legal tender but may not be accepted by retailers and is worth much more than its face value due to its rare value and silver content. The popularity of cross-border and online shopping is increasing the demand for more forms of money, such as popular cryptocurrency alternatives such as Bitcoin, which are recognized as legal tender. However, given the official objections to such alternatives, except in a few minor cases, they may still be a few years away and are not legal tender in the United States or most other countries. There are many online services that accept cryptocurrencies, and this practice is completely legal. Due to their status as unofficial competitors with legal tender, cryptocurrencies are mainly limited to use in gray and black market activities or as speculative investments. Cheques and credit cards are not really legal tender. They are simply legal tender that you have in your bank account or are available through the credit card company. The legal tender of the United States, the U.S. dollar, is considered legal for use in many other countries. Often, countries where less of their own currency is available accept national legal tenders such as dollars and euros. The term «legal tender» comes from the Middle French tendre (verbal form), which means «to offer».
The Latin root is tender (stretching), and the meaning of tender as an offer is related to the etymology of the English word «extend» (hold outwards). [5] As of 2005, banknotes were legal tender for all payments, and $1 and $2 coins were legal tender for payments up to $100, and silver coins of 10c, 20c and 50c were legal tender for payments up to $5. These old silver coins were legal tender until October 2006, after which only the new 10c, 20c and 50c coins introduced in August 2006 remained legal. [29] Banknotes and coins are legal tender, while stamps are not legal tender. Many countries consider coins and paper money to be an integral part of legal tender. Different jurisdictions understand and define legal tender differently. As a result, cashless forms of payment such as credit cards and cheques are never considered legal tender. The designation and specification of a national currency by legal norms and regulations should be recognized as a medium of exchange and as a source of payment of debts due.
To the extent that legal tender includes all denominations in circulation, the sum of the coins and the value that can be accepted as legal tender differ from country to country. Money orders and cheques are not legal tender as they are only accepted at the discretion of the seller, lender or creditor. It is commonly referred to as legal money. U.S. legal tender regulations are very clear, although most people don`t like to think about the legal perspectives of the issue at hand. Section 31 of the Currency Act of 1965, entitled «Legal tender,» states that «United States coins and currencies (including Federal Reserve notes and circulation notes of Federal Reserve banks and national banks) are legal tender for all debts, public duties, taxes, and duties. The Coinage Act of 1873 was replaced by the Coinage Act of 1965. The federal government introduced new regulations separating coins from silver and adjusted the silver content to half a dollar. Demonetization refers to the law that aims to eliminate the legal tender of a particular currency. This happens in most cases in situations where the country(ies) decide to have a different currency than the existing ones. This means that currently available currencies are removed from the system so that they no longer circulate.
This is usually done in circumstances where the country intends to replace old currencies with new ones. This will be achieved through the introduction of alternative coins and banknotes. On the other hand, demonetization is the direct opposite of demonetization, where the country recognizes available currencies as legal tender. In the case of the euro, notes and coins of the old national currencies were in certain cases legal tender from 1 January 1999 to 28 February 2002. Legally, these notes and coins were considered non-decimal subdivisions of the euro. [ref. needed] Before the Civil War (1861 to 1865), silver coins were legal tender only up to the sum of 5 US dollars. Before 1853, when American silver coins were weighed by 7%, the coins had exactly their value in metal (from 1830 to 1852).
Two 50-cent silver coins had silver with an exact value of $1. An 1849 gold U.S. dollar had $1 worth of gold. With the influx of gold from California mines in the early 1850s, the price of silver rose (gold fell). For example, from 1840 to 1852, 50-cent coins were worth 53 cents when melted. The government could increase the value of (expensive) gold coins or reduce the size of all U.S. silver coins. With the reduction of 1853, a 50-cent coin had only 48 cents of silver. This is the reason for the $5 silver coin limit as legal tender; Paying someone $100 in the new silver coins would give them $96 in silver.
Most people preferred bank checks or gold coins for large purchases. In 1964, the Reserve Bank of New Zealand Act stipulated that only notes issued by the Reserve Bank were legal tender. The Act also ended the right of individuals to redeem their banknotes for coins, thereby eliminating the distinction between coins and banknotes in New Zealand. The Act came into force in 1967 and established as legal tender all banknotes of five dollars in New Zealand dollars and above, all decimal coins, predecimal pence, shilling and guilder. The Decimal Currency Act, which created the basis for a decimal currency introduced in 1967, was also passed in 1964. According to the Economic and Monetary Union of the Republic of Ireland Act 1998, which replaced the legal tender provisions that had been incorporated into Irish law in previous UK laws, «no person, other than the Central Bank of Ireland and such persons as may be designated by regulation by the Minister, shall be obliged to accept more than 50 euro or cent coins in a single transaction». Legal tender is used exclusively for the secured settlement of debts and does not affect a party`s right to refuse delivery in a transaction. [38] Bank of England banknotes are legal tender in England and Wales and are issued in denominations of £5, £10, £20 and £50.