How LETS Works
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How LETS Works
LETS stands for Local Exchange Trading System. It gives people and businesses the opportunity to exchange goods and services without using traditional cash. In practice, a LETS system is based on a Directory of goods and services. Members can contact each other by phone, email or at frequent LETS social events. Transactions are paid for by LETS cheques, and& the transactions and balances on each account are recorded by the LETS Croys Treasurer. LETS works as a closed system: when all balances are combined, they add up to zero. Top of Page
No. Over the years, many communities around the world have started local currency systems. The first British LETS system was started in Norwich in 1985. Since 1991, there has been an exponential increase in the number of LETS in Britain. There are currently over 450, with new schemes starting up all the time. Top of Page
The variety of goods and services offered is limited mainly by the people and organisations that join. The more people who participate, the more rewarding the system will be, and the more the system provides basic necessities, the faster it grows. LETS allows people to realise the abundance around them, and to meet their daily needs with little or no cash. Participation by community businesses, as well as individuals, is encouraged. Top of Page
Many people have the same initial reaction : "I don't have anything to offer that anyone would want." One of the many purposes of LETS is to help participants to recognise that they have things to offer, and that they can be a valuable resource to the community. Just a few examples are: baking, making or repairing clothes, child care or babysitting, helping someone to lay out a garden or prepare a CV, growing organic produce, offering your car or van for lifts or moving furniture ... the list is limited only by your imagination. Top of Page
You provide details of the items or services you are offering, and these are entered into a Directory. You can change or add to your entries at any time. Every month or so, the directory is distributed to all members. Goods and services are organised under subject headings such as "Domestic and Family", "Repairs and Maintenance" etc. Top of Page
No. The purpose of a LETS system account is to say, allow you to build a shed for one person, and buy a sweater from another. Direct exchanges are fine if you can set them up, in which case you won't need to record them on the LETS system. Top of Page
The LETS system is flexible enough to allow you to receive all or only a portion of your payment in LETS credits. For example, a car repair may cost you £15 cash for parts, plus 30 Croys - that's the Croydon LETS unit of exchange. Top of Page
Some LETS systems have a currency based on the value of one hour of someone's time - but in our system, one Croy is notionally equivalent to one pound Sterling. Top of Page
It's just the same as a traditional economic system. The buyer and seller set a price, according to prevailing circumstances. The LETS system simply passes on information, and keeps a record of account balances. Top of Page
In a LETS system, spending actually creates wealth, which can then be spent by others, regardless of your current account balance. A negative balance means that you have a commitment to make a contribution in the future. Money is a scarce resource : if one person spends more than they can afford to repay, someone else has to lose. The LETS currency is different: it is created at will by members going into commitment with one another. Similarly, by earning credit, you don't deprive anyone else. Top of Page
If someone leaves LETS when they have a high commitment, the people to whom they have written LETS cheques still have those Croys in their accounts. No individual loses. It can be said that the community as a whole loses, but as it's only a small proportion of the system's total turnover, it's unlikely to affect members' trading. In practice, it usually works out that people leaving LETS with minus balances tend to roughly equal those leaving with plus balances. Top of Page
The same rules apply whether you trade in Sterling or LETS (local currency) : the relevant factor is not the type of currency in which you are paid, but whether the transactions are regular and of a business nature. Most LETS transactions do not fall into this category, but if yours are, you are responsible for keeping accounts and paying tax on your trading profits in the normal way. You cannot avoid tax liability simply by avoiding the use of sterling. Although tax must be paid in Sterling, you can claim expenses incurred in Croys against your total profits. Top of Page
A LETS system is based on true wealth - the availability and exchange of goods and services - whereas money has become an abstract concept. The World Bank estimates that money transactions on a world-wide scale are up to 20 times greater than necessary for financing world trade.
LETS fills a gap in the market left by an economic system which is always searching for the cheapest production location in the process destroying the local autonomous production system. In every village, every city, and every region there are people with abilities and resources which are not used in the established economic system. Yet there is demand for such abilities and resources.
Because LETS systems do not charge interest on negative (or positive) account balances, they offer the potential to support new business ventures, allowing people to draw on local resources instead of having to rely on bank loans. Over-production and over-consumption are driven by the need for high capital returns among businesses who are repaying interest on loans. LETS systems are non-profit-making organisations, which are owned and run by their members solely for the purposes of trade and mutual benefit.
Experience shows that people who are often excluded from the normal economic system turn out to bring unusual talents when they join LETS. Contributing their services to the community enables them to reclaim their sense of purpose, self-esteem and belonging. And others who need these services can afford them when they need them. The vision, then, is one where quality of life for all members of the community is significantly improved. Top of Page
Anyone can join Croydon LETS, whether you are one person with some skills or time to offer, a member of a family with various skills between you, or a business. You can also offer goods for sale - like that old sewing machine that's just gathering dust in the loft, maybe. Or you can hire out items that you use infrequently - like a ladder, drill or cement mixer, for instance. Whatever you have - skills, goods or simply time - you can convert it into Croys, to spend on something you need. Top of Page
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