The Government of Canada now has the power to remove legal tender status from bank notes—something it could not do before. Effective January 1, 2021, the Government will remove that designation from certain bank notes that are no longer being produced—the $1, $2, $25, $500 and $1,000 notes— the final step to fully removing them as transactional notes in Canada. This initiative is supported by the Bank of Canada.
Canada’s official notes and coins are called legal tender
Every bank note issued by the Bank of Canada since we opened our doors in 1935 is still redeemable at its face value. Technically, you can use a 1935 $25 bank note when you go shopping or pay a bill. The cashier might refuse it because it looks unfamiliar, but it is still worth $25. In fact, some bank notes, especially the rare ones, are worth more than the number on their face to collectors.
Bank notes issued by the Bank of Canada, together with coins issued by the Royal Canadian Mint, are what is known as “legal tender.” That’s a technical term meaning the Government of Canada has deemed them to be the official money we use in our country. In legal terms, it means “the money approved in a country for paying debts.”
Today, money is not just bank notes but takes many different forms: credit cards, debit cards, cheques, and contactless payments using mobile devices. You can pay with any of these forms of money, even though they are not considered “legal tender.” In fact, anything can be used if the buyer and seller agree on the form of payment. So “legal tender” has little impact on our everyday lives.
Bank notes will not lose their face value
In short, removing legal tender status means that some older bank notes will no longer have the official status of being approved for payments of debt. Essentially, that means you will no longer be able to spend that 1935 $25 bank note to buy items at a store. But these bank notes will not lose their face value. If you have any of them, you will still be able to take them to your financial institution or send them to the Bank of Canada to redeem their value.
Many other countries have been doing this for years. More than 20 central banks around the world have the power to remove legal tender status from their notes, including the Bank of England, the Sveriges Riksbank (Sweden), the Swiss National Bank, the Reserve Bank of New Zealand and the European Central Bank, to name a few.
Current, high-quality and secure bank notes
Having the power to remove legal tender status from bank notes means that we can do a better job of keeping the notes in circulation current. Newer bank notes have better security features that make them difficult to counterfeit, and they are in better condition overall. Keeping notes current means they work more efficiently for all of us.
Officially taking the $1, $2, $25, $500 and $1,000 notes out of circulation will help achieve that goal. This decision will have little impact on most of us.
That’s because these bank notes have not been produced in decades. In fact, you almost never see them. Some people do not recognize them, which means they likely would not be accepted in transactions.
- The $1 and the $2 notes stopped being issued in 1989 and 1996, respectively, and were replaced with coins.
- The $25 note was a commemorative note. Both it and the $500 note were discontinued shortly after they were issued in 1935.
- The $1,000 note stopped being issued in 2000.
By removing these old notes from circulation, we can ensure that our bank notes stay current, of high quality and secure. It also guarantees they are always easy to use.
For now, the government has indicated it has no plans to take any other bank notes out of circulation. The government will be able to remove other notes in the future as needed.
What to do with older notes
If you wish to redeem your bank notes, the simplest way is to bring them to your financial institution. You can also send them to the Bank of Canada to redeem their value. Or, you can always decide to keep your notes.
Affected bank notes
The following bank notes will be officially taken out of circulation. The total value of these notes still in circulation (in thousands of dollars) can be found in this chart.