Legal Tender Issue - Euro Currency Exists, How about a North American Currency?

News: Welcome to the Canadian Paper Money Forum.

Hello fellow collectors...

I was just searching through the Bank of Italy's website and came across this link:

http://www.bancaditalia.it/bancomonete/cambiolire

Exchange of lira notes and coins

With the introduction of euro notes and coins, those denominated in lire ceased to be legal tender at the end of the dual circulation period on 28 February 2002.

However, under Article 3 of Law 96/1997, it will be possible to obtain euros in exchange for lire for 10 years from the time the lira ceased to be legal tender.

Accordingly, until 29 February 2012 it will be possible to go to any branch of the Bank of Italy and exchange lira notes that ceased to be legal tender on 28 February 2002.

Banknotes

Art. 3 of Law no. 96 of 7 April 1997 establishes that banknotes shall be extinguished by prescription in favour of the Treasury 10 years after they cease to be legal tender. This article also specifies a time limit of 5 years for the prescription of all banknotes that had not been legal tender for at least 5 years by the date on which the law came into force (27 April 1997).

The attached table lists the lira banknotes under prescription with the respective prescription dates.

Coins

A 10-year time limit for the prescription of metal coins was introduced by Art. 3 of Legislative Decree no. 206 of 15.6.99 on “measures supplementing and amending Legislative Decree 213 of 25 June 1998 on the introduction of the euro into national legislation”.
“Micro” coins ceased to be legal tender as of 16/10/2000; the legal tender status was withdrawn for all the other lira coins on 28/02/2002.

MY QUESTION:

Now, because Italy had always used the Italian Lire, and in 2002, joined the European Union, they currently use the Euro Currency.   A thought came to my head... and I was thinking... "What if Canada, the US, and Mexico adopted a common currency?"    I know that this has been discussed before about a common currency, but I do not think there was a discussion about bank notes becoming worthless...  "What if Canada adopted a common North American Currency, and our Canadian currency ceased to be legal tender after joining the North American Union in 10 years, what impact would that have on money collecting in Canada?"   Just like in Italy, where their Italian Lire currency cease to be legal tender by 2012...    If it can happen to some European Union countries, it's always possible that it can happen in Canada?  I wonder what happened to those European currency collecting markets in those countries affected by the EU currency law? 

Let's assume if England/Scotland and Ireland joins the EU adopts the EU currency, their notes will also cease to become legal tender as well.   I wonder if there is that risk that it can happen?

Would you 'dump' your currency collection?   Would there be a Canadian paper currency market?   I wonder if a collector that has a UNC $1,000 Canadian Dollar Note from the 1954 series or 1988 series... would that collector cash-in their note?  Or keep it within their collection, knowing that it would be non-redeemable by the Bank of Canada?  This would also apply to prefix collectors.  Let's assume that a collector has a complete prefix series of $5, $10 and $20 notes.  That's still a lot of cash...

Would not the laws of supply and demand kick in? Maybe the market for loon, dollar, and peso becomes like the current chartered market, except on a much larger scale. Although an UNC $1000 1954 Modified, would break down nicely into a couple of nice single digit notes, rarer replacement notes, low numbered sets, etc...... I guess the real question from a collectors point of view is, will that UNC modified $1000 (or Birds)  be worth $1000 on the open market. Is it a hobby, or is it an investment?

It was the practice of Italy to demonetize its older notes prior to its adoption of the Euro.  France, Belgium and Luxembourg had a similar practice.  The notes of Germany, Austria and several other countries that have adopted the Euro remain convertible into Euros indefinitely.  If (and it's a big "if") Canada adopted a common North American currency, it's very likely our existing notes would remain convertible into the new currency indefinitely as this has been the Canadian practice since Confederation.  However, with the recent history of the US dollar, it's unlikely there will be much support for a common currency for a number of years.  So .... if you're collecting for investment purposes, you don't have a "currency risk".  Whether "replacement notes", "insert notes", "short run prefixes" and the like will remain popular amongst collectors is another matter.

Ireland has adopted the Euro and I believe its notes and coins remain convertible indefinitely. 

"What if Canada adopted a common North American Currency, and our Canadian currency ceased to be legal tender after joining the North American Union in 10 years, what impact would that have on money collecting in Canada?"

Like gendis pointed out, this is unlikely to occur.  But even if old Canadian notes ceased to be legal tender, would this really make any difference at all?

Inflation will take care of making the face value of notes effectively zero in due time.  The only real value of collectible banknotes in the long term of things will be due to numismatic interest and rarity.

Yea, all those Lawson Bouey $1000 notes might be worth 1/10th as much over night if they cease to be legal tender.  But they are already only worth only about 1/10th as much as when they were issued, so it would make little difference to the long term downward trend.

The argument to "cash in" your collection if it were to cease to be legal tender applies just as well even if it continues to be legal tender.

I think just about every paper money collector realizes that there is absolutely no point in holding on to cash to conserve monetary value.  If this were your goal, you should really be into gold and silver coins, not paper!

I love old paper bank notes.  But it really is only paper, not money any longer.  It's a historical and collectible artifact of what money was at whatever time it was issued. But don't fool yourself. 

Well this is not paper money but if I didn't put it up someone would have.

It is a concept coin on ebay with 650 minted item number 150239999336 and here are a couple pics.



[attachment deleted by admin]