Local Exchange Trading Systems (LETS) also known as LETSystems are local, non-profit exchange networks in which goods and services can be traded without the need for printed currency. In some places, e.g. Toronto, the scheme has been called the Local Employment and Trading System.
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Local Exchange Trading Systems (LETS) also known as LETSystems are local, non-profit exchange networks in which goods and services can be traded without the need for printed currency. In some places, e.g. Toronto, the scheme has been called the Local Employment and Trading System.
Michael Linton originated the term "Local Exchange Trading System" in 1983 and, for a time ran the Comox Valley LETSystems in Courtenay, British Columbia. The system he designed was intended as an adjunct to the national currency, rather than a replacement for it,Linton, Michael (August, 1994). The LETSystem Design Manual. Landsman Community Services Paper No. 1.3 Version No 1.3 although there are examples of individuals who have managed to replace their use of national currency through inventive usage of LETS.Fact: date=February 2007
LETS networks use interest-free local credit so direct swaps do not need to be made. For instance, a member may earn credit by doing childcare for one person and spend it later on carpentry with another person in the same network. In LETS, unlike other local currencies, no scrip is issued, but rather transactions are recorded in a central location open to all members. As credit is issued by the network members, for the benefit of the members themselves, LETS are considered mutual credit systems.
Criteria
LETS are generally considered to have the following five fundamental criteria:
- Cost of service — from the community for the community
- Consent — there is no compulsion to trade
- Disclosure — information about balances is available to all members
- Equivalence to the national currency
- No interest
Of these criteria, "equivalence" is the most controversial. According to a 1996 survey by LetsLink UK, only 13% of LETS networks actually practice equivalence, with most groups establishing alternate systems of valuation "in order to divorce 1 entirely from the mainstream economy." Michael Linton has stated that such systems are "personal money" networks rather than LETS.
How LETS works
- Local people set up an organisation to trade between themselves, keeping their own record of accounts.
- A directory of members' offers and requests—goods, services or items for hire, priced in local LETS units—is compiled and circulated.
- Members use the directory to contact one another whenever they wish. They pay for any service or goods by writing a LETS cheque or credit note for an agreed amount of LETS units, or by exchanging printed LETS notes.
- If applicable, the credit note is sent to the LETS bookkeeper who adjusts both members' accounts accordingly.
Since its commencement over 20 years ago, LETSystems have been highly innovative in adapting to the needs of their local communities in all kinds of ways. For example in Australia, people have built houses using LETS in place of a bank mortgage, freeing the owner from onerous interest payments.Fact: date=March 2008
