The Government of Canada now has the power to remove legal tender status from bank notes—something it could not do before.
Every bank note issued by the Bank of Canada since we opened our doors in 1935 is still redeemable at its face value. Technically, you can use a 1935 $25 bank note when you go shopping or pay a bill. The cashier might refuse it because it looks unfamiliar, but it is still worth $25. In fact, some bank notes, especially the rare ones, are worth more than the number on their face to collectors.
Bank notes issued by the Bank of Canada, together with coins issued by the Royal Canadian Mint, are what is known as “legal tender.” That’s a technical term meaning the Government of Canada has deemed them to be the official money we use in our country. In legal terms, it means “the money approved in a country for paying debts.”
Today, money is not just bank notes but takes many different forms: credit cards, debit cards, cheques, and contactless payments using mobile devices. You can pay with any of these forms of money, even though they are not considered “legal tender.” In fact, anything can be used if the buyer and seller agree on the form of payment. So “legal tender” has little impact on our everyday lives.
Having the power to remove legal tender status from bank notes means that we can do a better job of keeping the notes in circulation current. Newer bank notes have better security features that make them difficult to counterfeit, and they are in better condition overall. Keeping notes current means they work more efficiently for all of us.
Officially taking the $1, $2, $25, $500 and $1,000 notes out of circulation will help achieve that goal. This decision will have little impact on most of us.
That’s because these bank notes have not been produced in decades. In fact, you almost never see them. Some people do not recognize them, which means they likely would not be accepted in transactions.
- The $1 and the $2 notes stopped being issued in 1989 and 1996, respectively, and were replaced with coins.
- The $25 note was a commemorative note. Both it and the $500 note were discontinued shortly after they were issued in 1935.
- The $1,000 note stopped being issued in 2000.
By removing these old notes from circulation, we can ensure that our bank notes stay current, of high quality and secure. It also guarantees they are always easy to use.
For now, the government has indicated it has no plans to take any other bank notes out of circulation. The government will be able to remove other notes in the future as needed.
If you wish to redeem your bank notes, the simplest way is to bring them to your financial institution. You can also send them to the Bank of Canada to redeem their value. Or, you can always decide to keep your notes.
Affected bank notes
Source : Bank of Canada
