Within the euro area, only the euro has the status of legal tender. This results from the fact that the money used in a monetary system does only have the status of legal tender if it is provided for under the respective monetary law.

"Legal tender," however, can mean at least three different things:

1. Legal tender for the settlement of all debts. In the minimalist reading this means that a debtor can void his debts by presenting the coin of the realm, in preference to whatever other currency or payment in kind is specified in the contract. In the maximalist reading, the debtor can do this with prejudice to all other obligations to settle in particular currencies, and the creditor can demand the coin of the realm in settlement in preference to other currencies. (Which would actually make for an interesting ECJ challenge to the requirements in various "trade" treaties that expropriations must be compensated in the currency of the former owner's choice, on the basis that this prejudices the status of the Euro as sole legal tender of the Eurozone.)

2. Legal tender for the settlement of taxes. In the minimalist reading this means that you can always settle your debts to the tax man with the coin of the realm: The tax man cannot demand payment in kind if you are able to pay in the coin of the realm. In the maximalist reading, the coin of the realm is the only valid means by which to settle taxes.

3. Legal tender for the settlement of purchases. In the minimalist reading this means that merchants must offer their wares at prices denominated in the coin of the realm, and must transact if those prices are met by a customer solvent in the coin of the realm. In the maximalist reading merchants may only transact in the coin of the realm.

Greece could argue for an interpretation of legal tender as the minimalist reading of all three prongs, which would enable it to operate a dual currency system. This reading would actually seem to be supported by the EC document you link to.

In principle, maintaining a dual currency system is a major inconvenience. In practice, Gresham's Postulate will usually suffice to keep the hard currency out of general circulation. And even if it does not, operating a dual currency system is a considerably smaller inconvenience than regular major industrial depressions, which is the result of the current mismanagement of the eurosystem.

- Jake

Friends come and go. Enemies accumulate.