What is Legal Tender?
A legal tender is a public form of payment that can be accepted for a public or private loan or can fulfill financial obligations in accordance with the laws of the area. Usually, the term refers to national currency such as bills and coins instead of credit lines, checks, or cards. A creditor is responsible for accepting legal tender by paying a loan. Legal tenders can only be issued by a national body that has the authority to do so, such as the United States U.S. Treasury in the United States and Canada in the Royal Canadian Mint. The rules surrounding legal tender have proved important in the formulation of monetary policy for many countries.
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It can prevent coins and banknotes from being legally tendered if new notes of the same currency are replaced, or a new currency is introduced, replacing the former. In some kind of euro case, banknotes and coins of former national currencies were considered legal tender from 1st January 1999 to February 28, 2002. Legally, these coins and banknotes were considered on the non-Deccan subdivisions of the Euro.
Countries with a wide range of business and cultural relations may also accept each other's currency as a legal tender in limited quantities. For example, some U.S. and Canadian merchants near the U.S. and Canada border accept both the Canadian dollar and the U.S. dollar as payment for goods and services.
A cash society defines an economic state where financial transactions are not dealt with in physical banknotes or coins but digital information between parties (usually an electronic representation of money) through the transfer. Cashless transmission using digital currencies may also be possible. Bitcoin is another popular payment option, as it is a virtual online currency that can be used for a growing number of transactions but is not considered legal tender.
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