IJCCR vol 1 (1997) Williams 1 of 11 Local Exchange And Trading Systems (LETS) In Australia: A New Tool For Community Development? Colin C. Williams Centre for Urban Development and Environmental Management (CUDEM) Leeds Metropolitan University Brunswick Building Leeds LS2 8BU, United Kingdom Tel: 0113 283 2600 Fax: 0113 283 3190 International Journal of Community Currency Research 1997: Volume 1 ISSN 1325-9547 Williams, C. C. (1997) ‘Local Exchange And Trading Systems (LETS) In Australia: A New Tool For Community Development?, International Journal of Community Currency Research Vol 1 <www.uea.ac.uk/env/ijccr/> Introduction A Local Exchange and Trading System (LETS) is a locally created not-for-profit community enterprise. Its function is to enable people to trade goods and services with each other where the national currency is in short-supply. The underlying premise is that there are many people in contemporary society who have needs and wants, and many others who would like to work, but what prevents this supply and demand being matched is a shortage of national currency (Lang 1994). LETS overcome this by enabling people to exchange goods and services with each other priced in a local unit of currency which can be used instead of the national currency. This local currency acts as a scoring system by which individuals can record the value of the work that they have undertaken for somebody else and received. However, no coins, notes or tokens are produced or exchanged. Having paid a small registration fee to cover the costs of the administration of the service, LETS account holders are issued with a registration number which functions as a license to trade. Account holders then list the goods and services which they wish to offer and receive in a directory. Those seeking to trade contact the buyer or seller of a good or service and mutually agree a price in their local currency unit, which is given various local names such as cowries, ecos, tides, zacs and mouses in different LETS. Once the transaction has been completed, they notify the central accounting system either by telephone, cheque or ledger. Individuals accounts are adjusted accordingly and all account holders receive a regular statement of the balance of their account together with expenditure and income information. The central accounting office, therefore, functions in a similar manner to a formal sector bank. The difference is that no interest is charged or paid to account holders and debt within the system is actively encouraged. This is because debt is seen to represent 'a commitment to put "energy" back into the system at some time in the future' (Birch, Liesch and Yau 1994, p.5). So, although no national currency is changing hands, the local currency is enabling goods and services to be exchanged. The amount of local currency in the system is thus entirely dependent upon the volume of trade conducted. During the past five years or so, LETS have rapidly spread across most English-speaking industrialised nations. Australia now has 164 systems (Jackson, 1994a), New Zealand has 54 (Mallinson 1994), the United Kingdom has around 350 (LetsLink UK 1995) and there are about 20 in North America (Greco 1994). Indeed, they are now expanding in non-English speaking industrialised nations, such as Denmark, Finland, France, Germany, Holland, Norway, Spain, Sweden and Switzerland (LetsLink UK 1994). The problem, however, is that there has been little, if