Legal tender

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Legal Tender is a misunderstood concept. Coins and banknotes do not need to be 'legal tender' in order to be used as money to buy and perform other transactions for which money is intended. Legal tender must be accepted to settle a debt money (1) Coins and banknotes can lose legal tender if new notes of the same currency substitute them or if a new currency is introduced replacing the former one. Examples of this are • The United Kingdom, adopting decimal currency in place of pounds, shillings, and pence in 1971 • France revaluing the new franc after World War II to assist in identifying wartime profiteers.

In the case of the euro, coins and banknotes of former national currencies were considered as legal tender from January 1, 1999, until February 28, 2002 (in some cases), even if their corresponding currencies had ceased to exist. Legally, those coins and banknotes were considered non-decimal sub-divisions of euro.

Euro coins and banknotes became legal tender on January 1, 2002. All coins and all banknotes are legal tender throughout the eurozone, even if coins have national marks of each State. Therefore, it is possible to find Irish coins in Greece and Finnish coins in Portugal, for instances.

As legal tender can be refused until a person is in debt., vending machines and transport staff do not have to accept the largest denomination of banknote for a single bus fare or bar of chocolate, and even shopkeepers can reject large banknotes. However, restaurant's that do not collect money until after the meal is served would have to accept any legal tender, though they would not be obliged to provide change – the restaurant is not in debt, it has been given a gift. The right of a trader to refuse to do business with any person means a purchaser cannot demand to make a purchase, and so declaring a legal tender other than for debts would be redundant. In Scotland, the position is unusual. Scottish banknotes (issued by three private banks) are not legal tender; Bank of England banknotes would only be legal tender if they had a face value of £4.99 or less but no such notes are currently produced. Therefore, the only legal tender is the coinage - typically £1 and £2 coins - and these are heavy for large amounts. This does not seem to have affected the Scottish economy, and both Scottish and English banknotes are accepted as ordinary currency.