Demonetization is the act of stripping a monetary unit of its legal tender. It occurs whenever the national currency changes: the current form(s) of currency are withdrawn from circulation and withdrawn, often to be replaced by new notes or coins. Sometimes a country completely replaces the old currency with a new currency. 1. Does the repeal of Regulation Q have a significant impact on the balance sheets and revenues of deposit-taking institutions? What impact is expected on bank profits, on the distribution of deposit commitments between product offerings, and on interest rates and fees offered for demand deposits, scan accounts and settlement balance agreements? On December 11, 2016, the Venezuelan government announced demonetization after inflation of nearly 500% in the country. The people of the country had 3 days to get rid of the 100 bolivar notes (the most used currency) after the introduction of new notes of higher value. Until June 15, 2017, there were 7 renewals (one per month) of the legal use of 100 bolivar notes. The 100 bolivar notes were still legal tender as of 30 December 2017. As of 2005, banknotes were legal tender for all payments, and $1 and $2 coins were legal tender for payments up to $100, and 10c, 20c and 50c silver coins were legal tender for payments up to $5. These old silver coins were legal tender until October 2006, after which only the new 10c, 20c and 50c coins introduced in August 2006 remained legal. [29] In the case of the euro, notes and coins of the old national currencies were in some cases legal tender from 1 January 1999 to 28 February 2002. Legally, these notes and coins were considered non-decimal subdivisions of the euro. Singapore and Brunei have had a currency swap agreement since 12 June 1967.
Under the terms of the agreement, Singapore dollars and Brunei dollars can be exchanged for free at face value in both countries. Thus, the currency of one country is accepted as a “usual tender” in the other country. [31] The sixth series of Swiss banknotes from 1976, recalled by the SNB in 2000, is no longer legal tender but can be exchanged for banknotes until April 2020. The right of a trader in many countries to refuse to do business with a person means that a potential buyer cannot force a purchase solely by presenting legal tender, as legal tender should only be accepted for debts already incurred. The term “legal tender currency” refers to money that has received legal status from the government. Verifiable demand deposits are not legal tender because a person can legally refuse to accept payments in this way. Reason (A): They are in the bank, so they can only be used as legal tender if checks are issued for the transfer. In order to comply with the legal definition of “legal tender”, the exact amount due must be offered; No changes can be requested. [40] Allegation (A): Demand deposits are not legal tender. The opposite of demonetization is remonetization, in which a form of payment is re-established as legal tender. Throughout the United Kingdom, the 1 pound, 2 pound and 5 pound sterling coins are legal tender in unlimited quantities. Twentypence coins and fifty pence coins are legal tender in quantities not exceeding 10 pounds; Fivepence notes and tenpence notes are legal tender up to £5; and the cent and twopence coins are legal tender up to 20 pence.
[38] Under the Currency Act 1971,[39] gold sovereigns are also legal tender for any amount. Although not specifically mentioned on them, the face values of gold coins are 50p; £1; £2; and £5, a fraction of their value in gold bars. The five-pound coins, although legal tender, are intended to serve as souvenirs and are almost never seen in circulation. Banknotes and coins may be withdrawn from circulation, but remain legal tender. U.S. bank notes issued at any given time are legal tender even after they have been withdrawn from circulation. Canadian $1 and $2 notes are legal tender even if they have been withdrawn and replaced by coins, but Canadian $1,000 notes are legal tender even if withdrawn from circulation in a bank. However, banknotes withdrawn from circulation are usually no longer legal tender, but can be exchanged for common currency at the Bank of England itself or by post.
All issues of New Zealand paper and polymer banknotes issued from 1967 onwards (and $1 and $2 notes until 1993) remain legal tender; However, the 1, 2 and 5 cent coins are no longer used in New Zealand. Several commentators argued that the Agency should not repeal Rule Q or postpone the effective date of the repeal until such time as studies on the impact of the repeal, including the impact on safety and soundness, can be conducted and considered. Some commentators have suggested that the Council lobby Congress to repeal Section 627 of the Dodd-Frank Act (the provision that repeals the legal prohibition on paying interest on demand deposits), and some have argued that the Council should simply maintain or reinstate Regulation Q. One commentator noted that after 21. In July 2011, the Board would no longer have the legal authority to maintain Rule Q, stating that it nevertheless had the authority to issue a policy statement prohibiting the payment of interest on demand deposits until the banking organizations reviewed the impact of the repeal on safety and soundness and determined that it was safe and sensible to authorize the payment of such interest. Another commenter argued that repealing Regulation Q would create systemic risk and that the Commission should use its systemic risk authority under the Dodd-Frank Act to prevent the repeal from taking effect. Another commenter suggested a two-stage process in which the regulation would be repealed in the first phase, and then a second phase of twelve to eighteen months would be initiated, during which existing interpretations of Rule Q would remain in effect to give the FDIC the opportunity to consider adopting some or all of these provisions.