Paper Money

Bank of Canada seeks new authority on notes

The Bank of Canada seeks authority to revoke legal tender status of notes in denominations that are no longer printed. Some older notes like this 1979 $20 note will not be affected.

Images courtesy of Heritage Auctions.

The Bank of Canada announced that in its 2018 budget, the government will ask Parliament for the power to revoke the legal tender status of bank notes that are no longer being produced, and to remove them from circulation. The bank is not currently authorized to do this.

Analogous to all U.S. paper currency issued since 1861, all notes issued by the Bank of Canada since it opened in 1935 are still legal tender and can be spent anywhere. The bank says that the notes will not lose their face value. While they may no longer be spent in a store, redemption will be available at financial institutions and the Bank of Canada itself.

Canada would be the newest addition the roster of countries that withdraw legal tender status from their currency. The bank mentions in a press release that central banks in many countries have been doing this for years, including the Bank of England, the Sveriges Riksbank (Sweden), the Swiss National Bank, the Reserve Bank of New Zealand, and the European Central Bank. In many countries that have switched to the euro, the legacy currencies can still be redeemed by the national bank, under varying terms and conditions, far into the future.

Canada’s current circulating denominations are $5, $10, $20, $50, and $100. The ones proposed for withdrawal are the $1, $2, $25, $500 and $1,000 notes from the Series of 1935, 1937, 1954, 1969 to 1979, and 1986. Not all denominations were printed for each series.

The bank added that the $1 and the $2 notes stopped being issued in 1989 and 1996 when they were replaced by coins. The $25 note of 1935 was a commemorative note. That one, along with the $500 note of the same year, was discontinued soon after they were issued. The $1,000 note was not issued after 2000.

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