Background information on the bank note legal tender initiative in Budget 2018
Having the authority to remove legal tender status from bank notes would match the authority the government currently has for coins issued by the Royal Canadian Mint. The Bank of Canada supports this initiative because it can help the Bank ensure that bank notes used by Canadians are current, in good condition, easy to use and difficult to counterfeit.
As stated in Budget 2018, if this power is granted by Parliament, the government’s intention is to remove legal tender status from the $1, $2, $25, $500 and $1,000 bank notes. Removing legal tender status from these older notes is expected to have little impact on most Canadians, as these denominations have not been produced in decades and are rarely used in transactions. Importantly, removal of legal tender status does not mean these notes will lose their face value; the Bank of Canada will continue to honour them.
If the government is granted this power, the Bank of Canada will provide clear information to Canadians on how to redeem the affected bank notes. This will involve a period during which the notes can be redeemed through financial institutions—as Canadians can do today. After this period, the notes can be redeemed directly through the Bank of Canada.
There are currently no plans to remove legal tender status from any other bank notes.