paper money, not legal tender?

Question

someone told me that paper money is not legal tender, but is accepted just as a matter of habit.

it says on the uk paper money

"i promise to pay the bearer on demand" and then the amount ie £5

so is paper money just an iou from the bank

and has any on ever taken paper money into a bank and damanded the bank to pay them?

Answer 1

this is how someone explained it to me when i was younger
all the money in England is stored as gold in the bank of England and the "i promise to pay the bearer on demands" means that you can go into the bank with a £5.00 note and ask for this amount in gold i don't know weather this is true or not but it sounds logical

Answer 2

In UK law different coins and notes are legal tender for different amounts. I believe bronze is only legal tender to 20p, silver to £10 and not sure about £1 and £2 coins. Notes on the other hand are legal tender to any amount but with money laundering / fraud an issue shops have to protect themselves and many places will not accept large amounts of cash, particularly £50 notes.

Old style banknotes remain legal tender for sometime after they stop being issued. The Bank of England makes a decision in each case when old style notes lose their legal tender status.

Answer 3

The paper money you have is a reserve note like the dollar in the us the Gold is the back up standard for it. In other words your dollar should be able to be turned in as a note for Gold. If everyone in America or the UK decided to do this it would be impossible however we assign a value to the promissory note by saying a good or service is representatively worth so many dollars or pounds. After all it is easier and more convient to trade paper money that to trade chickens or eggs for car service ect. We as a society accept this and hence a cash based economy. IN early days the would use clams or even tea bricks for money.

Answer 4

It's origins are IOU's (which is why we still have "i promise to pay the bearer on demand" phrase on the notes), but like our own constitution, things have developed over time and were notes did once be simple promises between financial institutions, they are now legal tender accepted and traded around the world.

Answer 5

Paper money is legal tender,It is a promissory note from the chief cashier of the BANK OF ENGLAND

Answer 6

"has any on ever taken paper money into a bank and damanded the bank to pay them?"

Well you can swap notes for coins at a bank.

Answer 7

legal tender yes...you offer it --another is obligated by law to accept it rather than demand precious metal payment.

back by government...law.
government prints paper money in lieu of poeple carrying around gems or gold/silver.

what paper money is printed is backed by government and that paper is back by storage of "equal" amounts of precious metal.

same as in USA at Fort Knox...gold is storage to support that paper legal tender.

no--you cannot go to a bank and exchange paper for gold..
law prohibits that--thus the term legal tender for all debts.

USA used to print Gold and Silver certificates that could be redeemed....but prints so much money now that it went to "reserve notes" paper money that is back/supported by Gold.

Answer 8

that might be true on pounds if thats what it says on the money but it doesnt say that on paper euros and i know they are legal tender.

Answer 9

r u serious? of course its legal tender dont be so gullable in future the person who told u this is taking the pis$ out of u

Answer 10

Not true at all duh. We use it in the united states so whoever said that is a dumb @$$.