What is a LETS?
A LETS—a Local Exchange Trading System—is a membership-based mutual credit system. Trades are made using points and book-keeping rather than money.
Why do communities adopt LETS?
A LETS:
- connects people to each other, building community resilience
- increases the visibility of skills and surplus goods that are overlooked within the formal economy
- enables cooperative and reciprocal trade in the absence of money
- makes it easier for people to ask for and to give help
- keeps the system in perfect balance, so that there is always exactly as much credit as is required to meet members' needs
- allows people to buy on credit without paying interest
LETS build social networks based on reciprocity and informal agreements around the value of each trade. If you want to create new opportunities for the cooperative exchange of goods and services, LETS might be the right tool.
How does a LETS work?
LETS are a membership-based. When members join a LETS, they generally start with a zero balance and an agreed maximum line of credit. When two members agree on a trade, one is credited the agreed amount of LETS points (or credits), and the other is debited the same amount of points. For this reason, a well-run LETS system will have an overall system balance of “zero points” at any one time.
LETS often have multiple means for supporting trades. They may operate out of markets (for example, quarterly members markets), and these may be social events as much as trade opportunities. LETS may have online spaces where people ask for help and offer goods and services. They may have a members directory or newsletters to help connect members to each other.
Tax responsibilities
LETS members are advised to pay taxes as they would for cash sales.
Where can I go to learn more?
- Print resources available from the LE shop, such as Peter North's Local Money
- Check out Whanganui's River Exchange and Barter System (REBS) for a working example operating through the weekly Saturday River Traders Market, Facebook, and newsletters
- The Community Exchange System for an international, online platform
that is frequently used to facilitate LETS, complete
with additional explanation of how a LETS might work.
Another international online
tool is Community Forge.
- Contact the LE team for more support