A Federal Reserve Note is a type of banknote issued by the Federal Reserve System and is the main type of paper currency in the United States. Federal Reserve Notes are fiat currency, with the words “this note is legal tender for all debts, public and private” printed on each bill. (See generally 31 U.S.C. Â§ 5103). They are issued by the Federal Reserve Banks and have replaced United States Notes, which were once issued by the Treasury Department.