Canada Removes Legal Tender Status Of 5 Banknotes

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Author	Replies: 9 / Views: 2,273
PacoMartin Valued Member United States 411 Posts	Posted 10/01/2020 5:22 pm The $1 and the $2 notes stopped being issued in 1989 and 1996 respectively, being replaced with coins The $25 note was a commemorative note. It was issued in 1935 to commemorate the silver jubilee of King George V. Both the $25 and $500 notes were discontinued later on in 1935 The $1,000 note stopped being issued in 2000. Clearly the most substantive of these banknotes is the $1000 note. But they can still be exchanged at https://www.ceifx.com/locations and can be mailed in to the Central Bank until a yet to be determined date.All these banknotes together add up to about $1 billion. Canada passed the Uniform Currency Act in April 1871. In 1870, the first Dominion of Canada notes were issued in denominations of 25¢, $1, $2, $500 and $1000. $50 and $100 notes followed in 1872. Although this legislation change is unlikely to affect very many Canadians, the precedent is interesting. I don't know if many Canadians are likely to pull their $1 and $2 banknotes out of their collections and turn them in. In a few years, it is very likely Canada will declare non-polymer notes as "no longer legal tender". Canadian circulation of banknotes in millions (end of 2019) 294 $5 167 $10 939 $20 349 $50 527 $100 The ratio of Canadian $20/$50 circulating notes is 2.68 The ratio of US $20/$50 circulating notes is 13.20 * Moved by Staff to a more appropriate forum. * Edited by PacoMartin 10/01/2020 5:30 pm Report this Post to the Staff

Coinfrog Bedrock of the Community United States 94367 Posts	Posted 10/01/2020 5:47 pm Can you explain why Canada (among many other countries) regularly cancels the legal tender status of older notes, while the US has never done so? I've always wondered. Edited by Coinfrog 10/01/2020 5:48 pm Report this Post to the Staff
january1may Pillar of the Community Russian Federation 5172 Posts	Posted 10/01/2020 10:05 pm Quote: Canada (among many other countries) regularly cancels the legal tender status of older notes IIRC - though I might easily be mistaken on this - the post-1935 Canadian notes had all been legal tender until this change, so it is a major precedent. (The pre-1935 notes go under a different category, the equivalent of the USA's pre-1860s notes. I'm not sure if they were ever legal tender.) In a bunch of other countries, notes regularly stop being legal tender, but even then can still be exchanged at the central bank. I'm not sure why this happens; it might be related to outdated security features. I can't actually think of many cases (...I think Sweden is one?) where the old notes can't even be exchanged (without having been rendered worthless by inflation, at least). In addition, most of the world's countries had gone through at least one relatively recent currency change, whereupon old notes would have automatically lost their legal tender status anyway. Report this Post to the Staff
PacoMartin Valued Member United States 411 Posts	Posted 10/07/2020 9:59 pm Canada has never canceled the legal tender status of older notes which is why this decision is important. Right now the $1 and $2 are kept as collectibles, there are very few $25 and $500 notes in circulation, and the only real change is the $1000 notes which are in the hands of very few people. You are correct that most countries make older banknotes invalid. Primarily it is because inflation makes the denominations of older notes unmatched to present day value, and they are afraid of fraud. Also many countries like the windfall. Most, but not all old banknotes are returned to be destroyed, but there is always a percentage that don't come back that were lost or destroyed. In Switzerland the Central Bank must make a contribution to a charitable branch of the government for that amount. The next logical step for Canada would be to declare that only polymer notes are legal tender. Is there a darker side to this housecleaning? In the year 2001 Sweden was circulating 48.358 million 1000SEK banknotes worth more US$100 apiece. The latest series was introduced on 1 October 2015 and have never been in circulation above 3.5 million notes. Today there are 2.738 million in circulation. Officially they are not circulated because is no longer any demand from the people for this high-value note, however there are over 84 million 500SEK banknotes in circulation. When the ECB announced that the €500 banknote would not be included in the second series, many people believed that the ECB would use that opportunity to reduece the amount of cash in circulation. So far they haven't done so printing more than enough €100 and €200 banknotes to make up the difference. Do you think Canada would ever use this newfound authority to declare old banknotes invalid to reduce the amount of cash in circulation? Edited by PacoMartin 10/07/2020 11:40 pm Report this Post to the Staff
DBM Pillar of the Community Canada 9863 Posts	Posted 10/08/2020 12:55 am Here is something quirky, taken from The Bank Of Canada Act. Quote: Redemption of Notes Other than Those of the Bank Marginal note:Liability for notes 26 (1) The Bank is responsible for the redemption of notes payable to bearer on demand that were issued and outstanding on March 11, 1935 and immediately prior to that day constituted a direct liability of Canada, and such notes are and continue to be legal tender. Marginal note:Idem (2) The Bank is responsible for the redemption of notes of the Canadian banks listed in Schedule R of the Bank Act, chapter B-1 of the Revised Statutes of Canada, 1970, that were issued prior to January 1, 1950 and intended for circulation in Canada. The pre-1935 notes will continue to be legal tender. "Dipping" is not considered cleaning... -from PCGS website Edited by DBM 10/08/2020 12:57 am Report this Post to the Staff
PacoMartin Valued Member United States 411 Posts	Posted 10/08/2020 01:39 am What kind of bills could the US potentially declare as "no longer legal tender" 284,000 $500 bills in circulation 165,000 $1000 bills in circulation 350 $5000 bills in circulation 340 $10,000 bills in circulation United States Notes (instead of Federal Reserve Notes) Silver Certificates Small headed bills Green $100 bills (presumably you could still mail to BEP) Report this Post to the Staff
SteveInTampa Pillar of the Community United States 4637 Posts	Posted 10/08/2020 06:08 am Why would the US demonetize any of those ? Report this Post to the Staff
PacoMartin Valued Member United States 411 Posts	Posted 10/08/2020 11:06 am Quote: Why would the US demonetize any of those ? The same reason that other countries demonetize their old bills. For instance, there are over $300 million in large value banknotes still circulating. If they are demonetized, then the Federal Reserve could theoretically donate that money to government charity work. Of course, some of the really worn $500 bills would probably be turned in at commercial banks. The older "small headed" banknotes would be a windfall of several billion dollars. Right now, the issue has never been formally raised in the US, but since 1935 it was never proposed in Canada either. Major Latin American currencies On January 1, 1993, the Mexican peso was redenominated by dropping three zeros (1000:1) to return it to the traditional exchange rate of 3 pesos to the USD. Since then it has slipped to 21.49 Mexican Pesos to the USD. The largest banknote is worth MXN$500 -> US$23.27 On July 1, 1994 the Brazilian real was redenominated by a factor of 2750 so that it was at parity to the USD. Today it is 5.6281 Brazilian Real to the USD. Brazil's largest banknote is worth BRL$200 -> US$35.54 At some point these currencies will have to be corrected. The simplest way is to issue a new denomination themselves. Mexico is planning a new 1000 peso note followed by a 2000 peso note in a few years. The other way is to issue new banknotes hooked to the USD, and or possibly circulate two currencies like Cuba. Or they will have to redenominate and possibly switch to a CBDC. Edited by PacoMartin 10/08/2020 11:07 am Report this Post to the Staff
Sap Moderator Australia 16817 Posts	Posted 10/08/2020 7:01 pm Other countries routinely cancel and demonetize old banknotes, primarily for reasons of security - newer notes have security features the older notes lack; it would be relatively easy to replicate a passable American note from the 1950s using modern printing technology, for example. Switzerland routinely demonetizes its notes. They've had three demonetizations since WWII. They give you 20 years after replacing the banknote design, for you to find your old notes and hand them in, after which the money becomes valueless. The policy certainly has not hurt the international credibility of the Swiss franc. And it certainly discourages the hiding-money-in-the-mattress attitude, which must be good for business for the Swiss banks. Don't say "infinitely" when you mean "very"; otherwise, you'll have no word left when you want to talk about something really infinite. - C. S. Lewis Report this Post to the Staff
PacoMartin Valued Member United States 411 Posts	Posted 10/09/2020 7:29 pm The Advanced Counterfeit Deterrence (ACD) program was established in July 1982 at the Departmental Offices level of the U.S. Department of the Treasury to monitor and communicate counterfeit deterrence issues with the Secretary of the Treasury. 1990 - Security thread and microprinting are introduced to deter counterfeiting, first in the $100 bills and then in all bills (except $1 and $2) by 1993 1996 - first significant design change in 67 years. Redesign occurs so that new anti-counterfeiting security features can be incorporated, and it rolls out over the next four years. "The Bureau of Engraving and Printing announced that new designs would be undertaken every 7-10 years to stay ahead of currency counterfeiters." This year the new $100 comes out. Abbreviated New Currency Design 1996 is also the first use of watermarking in U.S. currency 1997 - the new $50 1998 - new $20 2000 - new $10 and $5 2003 - another redesign is announced abbreviated as NextGen Design. For the first time since 1905, US currency features subtle background colors. This year the redesigned $20 is released with subtle background colors of green, peach and blue. 2004 - the redesigned $50 is released, with background colors of blue and red. 2006 - release of redesigned $10, with background colors of orange, yellow, and red. 2008 - a redesigned Series 2006 $5 bill is released 2010 - the design for the new $100 bill is unveiled. Due to production problems, it was not released in 2011 as planned, instead release was delayed until October 2013. The next design is abbreviated Catalyst. The timeline will be: 2026 $10 2028 $50 2030 $20 2032-35 $5 2034-2038 $100 By that time there could be 40-50 billion $100 bills in circulation Report this Post to the Staff
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