Legal Definitions - federal reserve note

A Federal Reserve Note is the official paper currency used in the United States. These notes are issued by the Federal Reserve Banks and represent a promise from the U.S. government to pay the bearer on demand. They are essentially non-interest-bearing promissory notes, meaning they hold their face value without earning additional interest, and are universally accepted as legal tender for all debts, public and private.

Here are some examples illustrating the use and nature of Federal Reserve Notes:

• Example 1: Paying for a Service
  Imagine you've just had your car serviced at a local garage. When it's time to pay, you hand over a stack of twenty-dollar bills to cover the cost. Each of these twenty-dollar bills is a Federal Reserve Note. The garage accepts them because they are the recognized and legally valid form of currency in the United States, representing a secure and transferable store of value.

• Example 2: Receiving Change at a Store
  After purchasing groceries at a supermarket and paying with a larger denomination bill, the cashier hands you back several smaller bills as change. For instance, you might receive a five-dollar bill and a one-dollar bill. Both of these are Federal Reserve Notes, issued by the Federal Reserve system, and you can confidently use them for your next purchase, knowing they are universally accepted as U.S. currency.

• Example 3: Withdrawing Cash from a Bank
  When you visit an ATM or a bank teller to withdraw cash from your checking account, the physical money you receive consists entirely of Federal Reserve Notes. For example, if you withdraw $100, you might receive two fifty-dollar bills or five twenty-dollar bills. These notes are the tangible representation of your account balance, backed by the U.S. government and issued by the Federal Reserve, making them a reliable medium for transactions.