Many newsletter authors and so-called “permabears” recommend investing in gold and/or Bitcoin because it is a “real” currency and thus provides a hedge against a collapse of the dollar. While there is certainly some substance to argue that all fiat currencies fuel inflation, it is unlikely that gold and Bitcoin will become universally accepted currencies until the U.S. financial system sees a fundamental overhaul or change in legal tender laws. This note is legal tender (literal translation, money in payment of the debt) according to the law. In 1965, the Coinage Act was passed, defining the legal tender of the United States as U.S. coins and currency. This currency contained Federal Reserve banknotes circulating from national banks and the Federal Reserve. The Currency Act formalized that this currency must be accepted as payment of taxes, fees, levies and debts. He also restored the value of U.S. commercial dollars, which had previously been demonetized. However, there are some exceptions. In 2018, in the face of devastating hyperinflation, Venezuelan President Nicolas Madura ordered all federal institutions to accept a new electronic currency, the Petro, as legal tender.

The Venezuelan Petro is centrally controlled by the Venezuelan government based on its own assessment of the value of its natural resources. It has been claimed that the Petro is backed by Venezuela`s natural gas, mineral and oil reserves. However, Venezuela`s experience with the Petro has not progressed much, and the Petro, despite its status as legal tender, does not generally circulate in the form of currency. Although the Reserve Bank Act 1959 and the Currency Act 1965 stipulate that Australian notes and coins are legal tender, Australian notes and coins do not necessarily have to be used in transactions, and refusing to accept payments as legal tender is not illegal. It appears that a service provider is free to determine the commercial conditions under which payment is made before the conclusion of the “contract” of the supply or service. If a supplier of goods or services specifies other means of payment before the contract is concluded, there is generally no obligation to accept legal tender as payment. This is the case even if it is an existing debt. However, refusing to accept legal tender to settle an existing debt if no other means of payment/settlement has been determined in advance could have consequences in legal proceedings. [15] [16] In Hepburn v.

Griswold (February 7, 1870), the court ruled by a majority of four to three that Congress had no power to make banknotes legal tender. Chief Justice Salmon P. Chase, despite his involvement in passing the legal tender law as Secretary of the Treasury during the Civil War, drafted the majority opinion, stating that Congress` approval of greenbacks as legal tender violated Fifth Amendment safeguards against forfeiture of property without due process. Banknotes and coins may be withdrawn from circulation, but remain legal tender. U.S. bank notes issued at any given time are legal tender even after they have been withdrawn from circulation. Canadian $1 and $2 notes are legal tender even if they have been withdrawn and replaced by coins, but Canadian $1,000 notes are legal tender even if withdrawn from circulation in a bank. However, banknotes withdrawn from circulation are usually no longer legal tender, but can be exchanged for common currency at the Bank of England itself or by post. All issues of New Zealand paper and polymer banknotes issued from 1967 onwards (and $1 and $2 notes until 1993) remain legal tender; However, the 1, 2 and 5 cent coins are no longer used in New Zealand. Sometimes countries accept the legal tender of another country if they are close to the border or have close trade relations.

Shops and restaurants near the Canada-U.S. border accept U.S. and Canadian dollars to make it easier for tourists. Some countries around the world actually took the U.S. dollar as their own legal tender rather than their currency because they felt the dollar was more stable in value. This practice is called dollarization or currency substitution. 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.