Legal Tender

Legal tender refers to money that a government has officially declared as acceptable for settling debts and financial obligations. When a currency is designated as legal tender, creditors are obliged to accept it in payment. This status ensures widespread acceptance and simplifies transactions within an economy. It doesn’t necessarily mean that the money has intrinsic value, only that it’s recognized by law for settling debts. Examples include coins and banknotes issued by a country’s central bank. Understanding legal tender helps clarify the authority and reliability of the currency used in daily financial activities.