Complementary Currencies/BoK EN - Local Exchange Trading Systems (LETS)

General Description

LETS (Local Exchange Trading System or Local Employment and Trading System) is the running of a bookkeeping system intended for ordinary citizens and the economically excluded. Douthwaite and Wagman give a clear description of what LETS is: “(…) the common feature in all LETS is that members trade with each other using a monetary unit of their own devising and the system’s organizers keep records of all transactions, usually on a computer, so that it is possible to spot members who are taking more value out of the system than they are putting in” (1999:17). LETS logically have many similarities with barter. However, whereas barter is essentially a commercial organization and intended for businesses only, LETS is an association intended for ordinary citizens and usually voluntarily run by active community members on a not-for profit basis (Greco 2001: 89). Barter can thus be perceived a business to business (B2B) solution, whereas LETS is a consumer to consumer (C2C) solution.

Purpose

LETS are designed to strengthen the local economy and to empower the community (members) simultaneously (Seyfang 2002: 3). LETS reinforce the economy by addressing two failures of the mainstream monetary system; it provides an abundant medium of exchange and it creates a currency that cannot leave the area (Seyfang 2004: 7). By exchanging goods and services with local currency, members (theoretically) save on the expenditure of official currencies increasing purchasing power. LETS currency is at the same time abundant as credit is simply created with every transaction. With LETS, credit is never in short supply. Especially in the absence of official currency within a, region, town, district or city, it is believed that LETS initiatives will revitalize local economic activity.

By increasing personal economic relations, improved cohesion among LETS members and a sense of community is expected. Besides, a LETS mainly attracts people that in the mainstream economy are excluded from participation (e.g. the unemployed). LETS credit enables people on the margins of society to offer goods and services that are not valued in the mainstream market economy. Becoming economically active they consequently have an opportunity to reconnect to their communities. Additionally, it enables them to get access to products and services they otherwise would not have.