What is the legal tender of Kiribati
A legal tender can be used in payment transactions as a transferable value carrier. Specifically, that serves Means of payment as consideration for a service provided. In Germany, only cash is recognized as legal tender.
What is legal tender?
Money can only fulfill its function as a means of payment if if it shows credibility. The euro gets this credibility in Germany or the entire euro zone because it legal tender is. It is therefore clear to all companies and citizens what they can use to pay for benefits: the euro. Specifically, the state only sees it Banknotes and Coins as legal tender. The privilege for the production of this means of payment also rests exclusively with the state or the ECB.
In practice, consumers and businesses alike can but also provide consideration for a business in other ways. Money can also be transferred or sent via EC card be transferred. Even modern payment service providers such as PayPal or Instant bank transfer are legally legitimized. For example, if a brick and mortar retailer accepts US dollars for a purchase, that's okay too. Ultimately, however, only the euro is the legal tender that must be accepted as such by all economic agents.
Obligation to accept legal tender
In order to enforce the legal tender as such, the state has a so-called Acceptance requirement enact. This means, that creditors have to accept notes and coins as means of payment. An example:
- A customer is shopping in the supermarket.
- At the cash register, the cashier tells him that payments can only be made by credit or debit card.
- The customer refuses and insists on paying in cash.
- According to the legislator, the customer is right, because the legal tender must be accepted as such by the creditor - in this case the supermarket.
The only exception is for coins. In Germany, for example, the obligation to accept is limited to 50 individual coins in order to keep the effort for the creditor low.
Legal Tender - Definition & Explanation - Summary
- The legal tender is legitimized by the state and can only be issued by it or the central bank
- In Germany, coins and notes (euros) are the legal tender
- There is an express obligation to accept the notes and coins
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