The government of Canada seeking authority to remove legal tender status from old Canadian bank notes…

It is interesting how certain constitutions/rulebook restrict powers of the central government.

For instance in case of Canada, the Government does not have the authority to withdraw legal tender status of notes. Thus even some old notes issued since 1935 (when Bank of Canada started) which are barely in circulation remain legal tender. This is different from other countries where the Government can just withdraw legal tender of all possible banknotes.

Bank of Canada updates on this bit:

In the 2018 budget, the Government of Canada announced that it will ask for the power to be able to remove legal tender status from bank notes—something it cannot do now. If that power is approved by Parliament, the plan would be to remove that designation from certain bank notes that are no longer being produced—the $1, $2, $25, $500 and $1,000 notes—and they would be officially taken out of circulation. This initiative is supported by the Bank of Canada.

See the Budget (page 354) for details.

Further, there is more information on what we mean by legal tender:

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.

In short, removing legal tender status means that some older bank notes would no longer have the official status of being approved for payments of debt. Essentially, that means you would no longer be able to spend that 1935 $25 bank note to buy items at a store. But these bank notes would not lose their face value. If you have one of them, you will still be able to take it to your financial institution or eventually send it to the Bank of Canada to redeem its value.

There are also pictures of old notes in the press release.

The Parliament should give government authority to withdraw the old notes and not all current notes. This way Executive power will be in check…

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