Creating local currency systems

The Local Exchange Trading System (LETSystem), a computerized barter system, was developed in Vancouver in 1983, building on a previous project in 1976. When communities run out of cash, people can barter with their time or skills into a central bank. In some parts of the world, whole towns—including shops and doctors—take "green" money. It has the advantage of being independent form the financial system and in some countries people claiming social security are encouraged to join.

According to The E F Schumacher Foundation, there are now over 1000 such systems globally in countries including England, Scotland, Germany, France, Canada, Australia, Mexico. There are now nearly 45 LETS barter systems in the UK. Another estimate suggests there are more than 200 systems involving as many as 20,000 people. The inhabitants of the village of Stroud, England, can pay for legal advice from a solicitor in strouds as well as sterling. In Madrid, Spain, masseurs and furniture removers accept both valee kas and pesetas. The success of the Trueque Lets in the same city has served as a model for similar systems to be created in Barcelona, Alicante and the Canary Islands. Switzerland has the Troc de Service in Onex. Denmark has a Ring of Exchange. Talents or deutschmarks are used to pay for babysitting or carpentry in Berlin. There have been plans for international cooperation among Lets across Europe, more in terms of exchange of ideas and improvements, but not currency linking because Lets want to maintain a local aspect. Some of the fastest growth is in New Zealand, which has two of the largest LETSchemes -- the Auckland Green Dollar Exchange and the Plains Exchange and Barter System.

A new community bank in Barcelona called the "Bank of Time" enables local people to exchange services without the use of currency. The project enables housewives, young people and individuals with different skills to exchange their skills through the medium of the Bank's time accounts. As in any other financial organisations, the "Bank of Time" has a main office, a database, cheques and balances which in this case show in detail the number of hours transacted by each customer. The system enables people without economic resources, or with time available, to transact locally for a range of services not otherwise available to them. This sort of exchange is on the increase in Spain through the prominant Spanish co-operative movement thus recovering an ancient system of commercial interchange. The system aims to encourage local people to trade and exchange based upon their own skills and capacities, which otherwise the market economy might not encourage.

High unemployment, recession, and high interest rates have left many people unable to borrow or spend conventional money. Joining a Lets is relatively simple, it is a non-profit making system and there are no interest charges when you go into debt and no restrictions on credit. Lets permit people to use their skills and talents. Lets improve the economic and psychological health of the community because Lets tap local talent and spending power.

LETS are partly dependent on the trust and peer control of people who know one another, so they are limited at their boundaries. In the USA, at least, laws limit the issuance of non-Federal paper currencies for interstate trade. Lets can be vulnerable because they are dependent on enough people joining and remaining involved. National treasuries are concerned that local currencies could be exploited as a way of avoiding paying tax. It is also feared among Lets users that people could accumulate sizeable debts and then leave the community without repaying.