What is the importance of having coins and notes a legal tender?

Answer 1

Most, if not all countries, have their own currency. The country will have a central bank or other issuing authority that is usually solely responsible for the issue of currency within that country.

Examples are the "Reserve Bank of xxxxx", the "Central Bank of xxxxx", the "Bank of England", etc. The currency of that country is protected by making it Legal Tender.

The function of a national Legal Tender is so that any transaction between two parties in that country can be settled by an exchange of Legal Tender currency, which cannot be refused, to settle that debt.

After that, it all gets a little complicated about how many of a particular unit of currency can be used, for example, you would not go to do your weekly grocery shopping with Fifty Pounds worth of Pennies. The maximum legal tender amount for 1 and 2 Pence coins in one transaction is 20 Pence.