What is meant by ‘Legal Tender Money’?

The correct answer is - Money accepted by law for transactions

Key Points

• Legal Tender Money
  • Legal tender money is any official medium of payment recognized by law that must be accepted if offered in payment of a debt.
  • In most countries, this includes the national currency (notes and coins) issued by the government or central bank.
  • It is a legally recognized form of payment to extinguish public or private debt, and it must be accepted within the national jurisdiction.
  • Legal tender status is typically conferred by law and ensures that it is accepted for transactions and settlements between parties.

Additional Information

• Money used only in international trade
  • This refers to currencies or instruments that are primarily used for transactions between countries, such as the U.S. Dollar, Euro, or Special Drawing Rights (SDRs) issued by the International Monetary Fund (IMF).
• Fake currency
  • Fake currency refers to counterfeit money that is produced without the legal sanction of the government and is intended to imitate legitimate money.
  • It is illegal and not accepted as a form of payment.
• Digital currency only
  • Digital currency is a form of currency that is available only in digital or electronic form, as opposed to physical form like banknotes and coins.
  • Examples include cryptocurrencies like Bitcoin and Ethereum, but they are not universally recognized as legal tender.