On 8 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] In 1914, the Banking Amendment Act gave legal tender status to banknotes of any issuer and removed the requirement that banks authorized to issue banknotes exchange them for gold on demand (the gold standard). She spoke with such serious and tender grace that Gordon seemed to be placed back in her depths. In the case of coins with a face value greater than $10, a payment is legal tender only for the value of a single coin of that value. Where, by virtue of one or more obligations, several sums are payable by one person to another on the same day, the sum of those sums is deemed to be due and payable on that date. Bank of England banknotes are legal tender in England and Wales and are issued in denominations of £5, £10, £20 and £50. They can still be exchanged at the Bank of England, even if they are interrupted. Banknotes issued by Scottish and Northern Ireland banks are not legal tender anywhere, but are widely accepted by agreement between the parties. [41] The Supreme Court finally intervened and ended legal segregation in the landmark 1954 decision, Brown v. School Board. Legal tender serves several purposes.
By default, it is used by market participants to perform the functions of money in the economy: an indirect medium of exchange, a unit of account, a store of value, and a deferred payment standard. Proponents of legal tender laws argue that markets generally do not produce the optimal type, quality, and quantity of money, and that legal tender increases the usefulness of money as a means of reducing transaction costs. In particular, legal tender can allow flexibility in the money supply, and a single currency can eliminate the transaction costs associated with using multiple competing currencies. The introduction of legal tender is a means of achieving a single currency. Some currencies, such as the US dollar and the euro, are used as legal tender in countries that do not issue their own currency or have found the stable dollar preferable to their own currency. For example, Ecuador introduced the U.S. dollar as legal tender in 2000 after Ecuador`s currency, sugar, rapidly devalued, so that $1 was worth $25,000. The adoption of the U.S. dollar as the primary legal tender is colloquially referred to as “dollarization,” although this practice is commonly referred to as currency substitution. The New Taiwan Dollar issued by the Central Bank of the Republic of China (Taiwan) is legal tender for all payments made in 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] Prior to the Civil War (1861 to 1865), silver coins were legal tender only up to a maximum of US$5. 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.
The value of Federal Reserve notes is determined by federal law and the U.S. Department of the Treasury based on the country`s economic activity. Legal tender only works properly if the country`s economy functions properly. Federal Reserve notes have no expiration date, but many abandon circulation after so many years because they are beaten. Prior to the 1965 Act, the Currency Act of 1873 was still in force. This archaic law accepted silver coins minted as federal currency. Coins could no longer be minted in silver once the value of silver increased, because the actual value of the coins became greater than their assigned value. The importance of legal tender law lies in the fact that the government protects the value of your money. If you offer a creditor $1,000 in payment of a debt, they must accept it, regardless of their opinion of you personally or other problems the creditor is facing. 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 Bank Note Issue Act of 1893 allowed the government to declare a bank`s right to issue legal tender. This allowed the government to make such a statement in support of the Bank of New Zealand when the bank ran into financial difficulties in 1895 that could have led to its collapse.
