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It is U.S. government policy that all designs of Federal Reserve notes remain legal tender, or legally valid for payments, regardless of when they were issued.

The federal government decided that paper money was the ultimate solution. Not only would this help bring official currency back into everyday circulation, but it also allowed the cash-strapped federal government to issue money without purchasing expensive gold and silver.

Paper money was widely accepted as a unit of exchange, but coins remained dominant in everyday commerce. Paper money overtook coinage as the primary means of exchange in 1933.