Originally, they were distributed directly by the U.S. Treasury Department to pay for Union expenses during the American Civil War. Over the next century, the legislation relating to these notes was amended several times and many versions were published by the Ministry of Finance. The Swiss franc is also legal tender of the Principality of Liechtenstein, which is linked to Switzerland in a customs union. In 1844, ordinances were passed making Union Bank banknotes legal tender and authorizing the government to issue debt securities in small denominations, creating two groups of legal tender. These bonds were put into circulation, but exchanged at a discount to their face value due to the distrust of the settler population towards the colonial government. In 1845, the British Colonial Office banned the ordinance and the obligations were recalled, but not before first causing panic among the holders. Shortly after the ban on private ownership of gold in 1933 (which was lifted in 1974), all remaining types of currency in circulation, national bank notes, silver certificates, Federal Reserve notes, and U.S. notes, were exchangeable by individuals only for cash. Eventually, even the redemption of money stopped in June 1968, at a time when all U.S. currency (coins and paper) was being converted into fiat money. For the general public at the time, there was little to distinguish U.S. notes from Federal Reserve notes.
As a result, public circulation of U.S. notes in the form of $2 and $5 bills ceased in August 1966 and was replaced by $5 Federal Reserve notes and eventually $2 bills. U.S. notes became scarce in local commerce, and beginning in 1966, the Treasury converted the outstanding balance into new U.S. notes worth $100, most of which were not spent in bank vaults. The US$100 notes of the 1966 and 1966A series were printed from 1966 to 1969, with public circulation officially ending on January 21, 1971. [22] In September 1994, the Riegle Improvement Act relieved the Treasury of its long-standing obligation to keep U.S. banknotes in circulation. Just prior to the Riegle Act, the Treasury considered putting into general circulation its large remaining stock of unissued U.S.
$100 notes, but with the recently revamped 1996 series of $100 Federal Reserve notes, it was decided that confusion would likely arise with the sudden appearance of two very different $100 notes in circulation. [23] The Treasury announced in 1996 that the remaining stock of $100 worth of U.S. notes had been destroyed. [24] Some currencies, such as the US dollar and the euro, are legal tender in countries that do not issue their own currency or that have found the stable dollar preferable to their own currency. For example, Ecuador adopted the U.S. dollar as its legal tender in 2000 after Ecuador`s currency, sugar, rapidly devalued, making $1 worth $25,000. The adoption of the U.S. dollar as the primary legal tender is colloquially referred to as “dollarization,” although the practice is commonly referred to as currency substitution. 8.
In November 2016, Prime Minister Narendra Modi announced that the existing INR 500 and INR 1000 notes would no longer be accepted as legal tender in order to combat counterfeiting, tax evasion and the shadow economy. [27] The Reserve Bank of India has described a system whereby holders of such notes can either deposit them into their bank accounts for the full and unlimited value or exchange the notes for new ones, subject to a cap. [28] Sometimes, monetary issues such as commemorative coins or transfer vouchers may be issued, which are not intended for public circulation, but are nevertheless 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”. In order to comply with the legal definition of “legal tender”, the exact amount due must be offered; No changes can be requested.
[40] Under the Currency Act, there are limits to the value of a transaction for which only coins are used. [22] A payment in coins is legal tender for up to the following amounts for the following coin denominations: 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. [33] However, since 2007,[34] candidates for election officials in the Republic of China are no longer allowed to file a deposit. [35] On the other hand, gold or silver coins are not necessarily legal tender if they are not fiat money in the jurisdiction in which they are offered in payment. The Currency Act of 1965 states (in part): In 1847, the Colonial Bank of Issue became the sole issuer of legal tender. In 1856, however, the Colonial Bank of Issue was dissolved; and the Paper Currency Act of 1856 reconfirmed the legal tender of the Union Bank. The law also allowed the Eastern Bank to issue legal tender, but this bank ceased operations in 1861. Demonetization is currently prohibited in the United States and the Coinage Act of 1965 applies to all U.S.
coins and currencies, regardless of age. The closest historical equivalent in the United States, outside of Confederate silver, was from 1933 to 1974, when the government banned most private property of gold bullion, including gold coins held for non-numismatic purposes.
