What is Legal Tender?

What’s wrong with legal tender?


The money we use everyday is what is normally called legal tender. Legal tender is a medium of payment recognized to be valid for meeting any financial obligation. Being the payment of taxes an obligation to which all citizens are subject, States around the world enjoy the privilege of issuing the currencies we all need and therefore accept. For a long time, this privilege has been shared with banks, which are entitled to create money through the provision of credit. In order to increase their revenues, banks can make money more expensive by making it artificially scarce. This means money ends up being distributed following a criterion of private profit rather than social welfare — this is where the values of financialization enter the scene: There is never enough money where it is needed and too much where it harms the environment (Dunkley, 2017). Moreover the growing interconnectedness of financial systems renders an unstable global economy where, unlike any other period in history, most of us are increasingly subordinated to massive upheavals coming from the financial sphere.

In other words, owing to factors that go beyond the domain of local communities and sometimes even nations as a whole, there is not enough money and credit available to function as a means of exchange to boost economic activity and employment. Even though individuals have skills and capabilities, communities as a whole come to a standstill because their members do not have enough money to make production and exchanges happen. If people are unable to exchange their goods and services solely because of lacking the correct piece of paper, then there is clearly a requirement for them to be issuing their own paper (Dunkley, 2017). This is what complementary currencies offer.

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