Legal Tender

Dror Goldberg, Bar-Ilan University

Abstract. The legal foundation of the monetary system is the law of legal tender. The “legal tender” concept is used in models to describe almost anything except for what it really means in actual laws. Such errors prevent an accurate evaluation of the importance of this legal status. This note explains in simple terms what “legal tender” really means.

JEL Codes: E42, K12

Keywords: Legal tender, Contract law, Taxes