Currency Systems
Backed Currencies		Ithaca HOURS
LETS		National Currencies
ROCS		Time Dollars
Complementary Currencies

LETS - Local Exchange Trading Systems

Benefits

How Issued

Benefits of the LETS model:

No central authority is required to guarantee the currency and manage its supply: LETS is backed by goods and services, and is created as mutual credit (like ROCS and Time Dollars).

Given that there is no interest on LETS currency, the built-in incentive to discount the future found in national currencies is reduced, but not reversed.

How LETS credits are issued:

LETS money (like ROCS and Time Dollars) is created as mutual credit: Each transaction is recorded as a corresponding credit and debit in the two participants' accounts. The quantity of currency issued is thus automatically sufficient and (unlike fiat money) does not depend on the judgment and effort of a central authority.

When too much money is issued, the local currency will inflate or even become completely worthless; when currency is underissued, the problem local currency was meant to address--too little trade among people in the community--will remain. So it is not a trivial task for anybody or any group to guess the correct quantity of money to issue, because that ideal quantity will continuously vary according to the rate of acceptance of the local currency, which will change over time; and the overall state of the local economy (including the conditions of the economy in the "normal" national currency), which will also change over time).

Mutual credit solves both these problems in a self-organized way.

LETSystems measure Green Dollars in the corresponding national currency unit.: Using the National Currency as a reference is more convenient for convertibility and easy pricing, but anchoring a local currency to national fiat money leaves the local currency system vulnerable to any crisis occurring in the national currency; thus the importance of this feature will depend on the particular national currency chosen as reference (e.g. for the WIR it worked well because the Swiss Franc has been the most stable national currency in the postwar era).

LETS exchanges are negotiable.: In LETSystems, as in most other complementary currencies (and in national currency), the amount of money exchanged in any transaction is negotiable. LETS is thus flexible enough for use in diverse communities where products or services requiring a greater variety of skills, experience, training, equipment, or risk are exchanged.

Structural incentives in LETSystems:

Complementary currencies, because they do not bear interest (which discounts future earnings in relation to present cash),

promote longer-term planning by encouraging participants to invest in productive assets rather than hoarding currency; and
encourage trade and cooperation, because the money is in sufficient supply.

Those complementary currencies backed by an external reference (a commodity or service) rather than the fiat of a central authority are less susceptible to inflation.

Applications of the LETS model:

Guelph LETS
Fremantle LETS
LETS Vancouver
LETS Edmonton
Maui Community Way
contact La Troca: Sistema d'Intercanvi Local, Barcelona
LETS in Strohalm, Utrecht
The Peterborough LETS Exchange, "Ontario's second-largest" local exchange.
LETS Buzz
The Southville LETS Group
Maryborough LETS
This list of LETS applications in the developing world includes examples in Thailand, South Africa, Senegal, The Democratic Republic of Congo, Mexico, and Latin America

Related Resources

Also on the Transaction Net site:
- Pages devoted to other currency models (Time Dollars, backed currency, national currency, Ithaca HOURS, and ROCS money); as well as general descriptions of how money works and how currencies can fill complementary roles in the economy.
- reviews of all available Payment Methods
- a glossary of money-related terms and concepts
- a directory of publications relating to complementary currency systems and how the Internet can facilitate them.
Be sure to check out the LETS home page and its FAQ, as well as the ambitious Community Way proposal in the LETSgo: LETSystems in Action directory.
How to make LETS work in your community
the LETSystem design manual
Sidonie Seron's thesis on LETS
"Reviving Local Economies" by Wes Nickerson
Gill Seyfang presents these LETS and Sustainable Development links as well as an article on Examining Local Currency Systems: A Social Audit Approach
WALLETS maintains information about the LETSystems in Western Australia
Colin Williams's article on LETS in Australia
The Global Ideas Bank index of New Money Systems and Financial Innovations includes a segment on Green Dollar LETSystems.
The home page of John Turmel, a unique and prolific advocate of LETS.
Green Pages LETS links
Money and the Sustainable Economy
Hans-Joachim Werner presents some LETS links
Richard and Amanda Kay's page links to several LETS-related sites.
"Toronto $Dollar Builds Community" in _Natural Life_ magazine.
An article by Wayne A.M. Visser proposing Local Currencies and Trading Systems in South Africa.
Canada's Abolitionist Party on currency systems.
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Join us in The Money Conference, where we're gathering to compare insights on all kinds of money systems--old, new, high- and low-tech, real or theoretical--and to synthesize from our shared experience wiser and more efficient models of exchange media. Sign up for Motet conferencing, then come on in and introduce yourself, or jump right to our LETS conversation.