Do you know a major Community Currency (Regional Currency) called “LETS”? There are various Community Currencies around the world but LETS has been existing for a long time and Community Currencies based on the LETS system are still in circulation now. This time, I will explain about LETS in detail.
The System of LETS
LETS is a ledger type Community Currency, projected in Vancouver, Canada in 1983, and the inventor is Michael Linton.
LETS is an abbreviation of Local Exchange Trading System. It is created with the aim of revitalizing the community by generating unique economic zones, using LETS in a specific area and people helping each other.
The flow of using LETS is as follows:
- Register with the community
- Register the service
- Fix the reward
- Enter the data in the passbook
Register with the Community
Since LETS is a Community Currency, LETS is available in a limited area (community). First, you need to register with the community management to use LETS.
Register the Service
You need to register the services below at the office:
- The service you want to receive
- The service you can offer
Any services will do. For example, you can offer a dog-walking, or you can offer your skills. If you want a dog-walker, you register it as “the service you want to receive,” then you will be matched with a dog-walker.
Fix the Reward
Normally, the legal currency can only be issued by the central bank of the country. If you talk about Japanese yen, it is issued and managed by the Bank of Japan. However, unlike the legal currency, Community Currencies can be issued by anyone. And LETS is issued and managed by the local community. The unit of LETS is “Green Dollar” and 1 Green dollar= 1 Canadian dollar. The service fee can be fixed between the receiver and the provider of the service.
Enter the Data in the Passbook
Community members of LETS have passbooks to record their LETS. When the service is actually finished, they will record it to each other’s passbook as follows. The following is an example of a dog-walking done for 300LETS.
- The receiver of the service（the dog owner）：－300LETS is recorded
- The provider of the service（the dog-walker）：＋300LETS is recorded
Then they will write their signature on each other’s passbook, which confirms that this service was provided for 300LETS. You can see from this case that the total amount of LETS remains the same all the time.
The Characteristics of LETS
Potential Risk for Free Riders
You need to provide your own goods and services to earn Green dollar. However, even if your balance is negative, you can still receive other goods and services.
Physical currency exchange doesn’t occur in LETS transaction. It is not convertible to other currency, so it is suitable for services that does not cost such as mutual assistance.
Strengthen Community Relationship
Local Currency LETS can be paid for people’s kindness such as “bringing heavy baggage” or “acting as a guide”, which cannot be paid by legal currency. It will create opportunities to communicate with others and to help each other, which leads to community revitalization.
A Successful Case of LETS : “Bunya”
In 1987, it was introduced in Maleny, Australia. Jill Jordan, who established a credit union and co-op in Maleny, introduced a Local Currency System, LETS, with units called “Bunya” to promote economic activities of people who cannot be covered by the credit union.
１Bunya＝１AUD, interest-free and ledger type of Community Currency. They don’t issue paper money or coins.
At that time, there were many unemployed people in the town of Maleny. Then young people who were physically well worked for elder people in LETS, and the elderly taught skills which they had learned from their experience to young people. This kind of exchanges connected elder people to young people, and the system to help each other was developed.
This generated the purchasing capacity of the poor and enabled mutual support by exchanging the abilities of the young and the elder, which resulted in social benefits as well as economic benefits that gave opportunities for low-income people to buy and sell goods and services.
Society Generated by LETS
Unpaid Work can be Rewarded
Unpaid Work means work without payment in the legal currency, such as housekeeping, caregiving, local volunteer activities, etc. If you pay for such labor in the legal currency, the local government will bear the payment, which will worsen the fiscal situation. Therefore, payment in the legal currency is difficult. However, it is hard to ask someone “to take care of your child temporarily” or “to go dog-walking” without paying anything.
If you can pay LETS for Unpaid Work, LETS will circulate within the local community. After receiving LETS, you can use it for other services, which will strengthen the community in the area.
Also, you can offer your specialties or hobbies as a service. This can be social rehabilitation of the elderly who have job skills but have no place to show off.
Thus, the Local Currency LETS is adopted in more than 300 regions throughout Australia, and more than 2000 regions worldwide. If you aim at community revitalization, LETS is a greatly effective system for you.