Reviewed by Aug 27, 2020| Updated on
Legal tender is something which is acknowledged by the laws as a mechanism to settle a private or public debt or in order to meet a fiscal responsibility which includes paying taxes, abiding by contracts, and finally damages or fines. Almost every country uses its national currency as legal tender.
Creditors are lawfully responsible for accepting legal tender for the repayment of debt that they have availed. Legal tender is constitutioned by a law that specifies the object to be utilised as legal tender and the organisation that is commissioned to create and issue the same to the public such as the Reserve Bank of India.
Breaking Down Legal Tender:
In India, the authentic legal tender of the Reserve Bank of India consists of coins and notes. The creditors are supposed to accept them as a payment towards the debt. Nevertheless, apart from where the state laws prohibit, the private organisation can decline to accept the payment in some of the forms given that a transaction has not taken place and debt is not availed by the person.
By design and default, legal tender regulations alleviate the general implementation of something instead of the current legal tender as money in the economy. Cheques and credit card swipes are considered as legal tender. They just function as a substitute and merely depicts the means through which a holder of the check may go on to receive legal tender for the availed debt consequentially.
Cryptocurrencies are not commonly admitted for usability as money as they are not legally recognised in many countries across the world. In 2013, Arizona’s governor voted against a bill which was tabled to make silver and gold coins as legal tender in addition to the official currency in the country.