TNAG-0717-FCO40-914-Banking-and-monetary-matters-in-the-Dependent-Territories-is-1978 — Page 149

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so for a period after "de-legal tendering" (see Section 8.13). Where, as often, the period for unconditional exchange is limited, this in itself is a departure from standard UK doctrine towards dependencies, which maintains that perpetual liability for outstanding currency should be retained, even if the liability is after a time transferred from the currency authority to its respective government.

It is doubtful whether it is constitutionally possible, or

indeed equitable, for an issuing authority to "de-legal tender" coins without giving a period of warning or notice during which an exchange for new coins may be effected, without charge or restriction, by any holder of coins. It would, however, seem legitimate to adopt a policy whereby numismatic coins were "de-legal tendered" at regular intervals subject to the

statutory period of notice (one to three months). This in

itself would do nothing to affect liability for the coins as the issuing authority would still be obliged to exchange coins handed in at a later date, subject to the time limits detailed

in Section 8.13.

All legal liability, whether to exchange for coins of the current

series or to convert into equivalent foreign exchange, can be removed by the subsequent demonetisation of the coins. This

may, in theory at least, accompany the removal of legal tender status, although simultaneous action may not be acceptable on grounds of equity. There would, therefore, almost certainly be a period during which liability for the coins would remain unaffected and during which the issuing authority would be most vulnerable to either exchange or conversion/redemption (if this facility were retained).

While the present strength of the coin market lasts it would

almost certainly lend an opportunity to remove some of the existing liabilities of dependencies by regular demonetisations with little risk of provoking large-scale exchanges or redemptions, although any steps to demonetise or even "de-legal tender" coins too soon after their issue would result in damage to the territory's reputation, especially if the coins' legal tender status and/or redeemability had been emphasised in the original marketing campaign. It would, therefore, be sensible

to begin a process of demonetisation with the earliest series.