TNAG-0717-FCO40-914-Banking-and-monetary-matters-in-the-Dependent-Territories-is-1978 — Page 126

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Legislation

8.13 (1)

In order to clarify remarks made later (in Section 10), an

outline is given below of the procedure under existing legislation for

the removal of legal tender status and final demonetisation of notes and coins. This is followed by more specific remarks about currency

legislation in each of the territories.

8.13 (2)

It is usual for existing circulatory coins (and notes) to

have their legal tender status removed after a period during which:

(a) the condition of coins has deteriorated through use; and/or

(b) it is desired to introduce new designs (sometimes, for example,

because of a change in the political regime); and/or

(c) a substantial volume of forgeries has begun to appear (this

factor usually applies to notes).

The practice is then to exchange the old series (of coins or notes)

for a new series, chiefly through the banking mechanism.

The banks,

by arrangement with the issuing authority, cease to re-issue the old

series and begin to issue only the new one.

1. Notice is given to the public that, with effect from a

specified date, notes or coins of a particular series, etc.,

will no longer be legal tender. The period of notice usually

ranges between one and three months, during which the holder may exchange the currency in question at face value for other legal tender currency.

2. The coins cease to be legal tender on the specified date.

3. A period of about five years may follow during which the

holder of a non-legal tender coin may continue to exchange

it at face value, without the imposition of any charges by

the issuing authority.

4. This may be followed by a further period during which exchange

is possible but subject to any conditions and charges the authority may impose at its sole discretion. In practice

such conditions may be introduced with effect from the date

that legal tender status is withdrawn; on the other hand

this right to exchange at face value without any conditions

may be perpetual.

5. Where applicable, liability for further exchanges may be

removed from the issuing authority to its government by the