UK LETS and Complementary Currencies
Development Agency


published by

LETS and Transition Towns

In the reprinted 2008 edition of The Transition Handbook, the index reference for LETS takes one to page 197, where in the paragraph headed The Totnes Pound it says ........"LETS schemes (Local Exchange Trading Systems) are not really up to the job of economic relocalisation. Whilst they have an essential role to play, they tend to have a limited lifespan, and rarely make the step into being of much use to local businesses. Given the scale of the challenge presented by peak oil and the degree of urgency in the rebuilding of local resilient infrastructure, likened by some to a wartime mobilisation, we felt Totnes needed more than LETS."

At no point have the organisers of Transition Towns sought to update themselves on the latest innovations in LETS, which creates local currency mutually, independent of the banking system. Instead, they have encouraged activists to rush round the town persuading shopkeepers to sign up to accepting local vouchers for which people have paid a pound sterling. Most will agree, if it looks like they will be included rather than excluded in whatever this "let's keep it local" public relations exercise is all about. But the follow-on plan for when the ten thousand notes have been dispersed, with endless samples kept as a souvenir in bottom drawers or sold elsewhere for way above their face value, has never been clear.

Following Michael Linton's Canadian experiments in the eighties, the first LETS in the UK was set up in Norwich in 1985. LETSlink UK was set up by Liz Shephard in 1991 and began monitoring and supporting the development of LETS, promoting a community-based UK-LETS Model. Over the years, the operation of different types of community currency has been played out in many different instances, so that we can assess the results of a twenty-year experiment. These systems pre-dated the internet, and imitated banking methods in small local pockets. Apart from a handful of local authority involvement in schemes, LETS were unfunded, grassroots initiatives. In most cases the model was self-limiting, with organisers aiming to keep things manageable by asking for sterling renewals each year, thereby keeping the trading market too small to be viable.

LETS that have survived for more than a decade using these methodologies are usually doing something to sustain themselves that was not in the original model. They may be high on public relations, generating an ongoing flow of new participants to balance out the complacency of the existing members, or perhaps they focus on pastoral care, providing social benefits over and above the economic ones.

Monetary reformers have railed for decades (indeed centuries) against the basic injustice of the banking system, but its endemic nature means there is little flexibility to effect the radical change that would satisfy seekers after justice. Meanwhile the banking monopoly is broken at least in the technical sense. In the last decade, customised software together with opensource content management systems allowing people to go online and directly communicate with others, have developed at such a pace that there is a choice of systems either dedicated or adaptable for running community currencies, and we now have a growing number of groups confidently trading online. The main challenge is now governance. This means managing a scheme so that it can scale up, enable wider participation, and be an instrument of social justice rather than of privilege.

The keys to how LETS can meet the challenge of Transition Towns, are (i) using up to date dedicated web-based software, (ii) integrating online, text, cheque and "cash" (voucher) transactions in the same currency which is sourced MUTUALLY, and thus separately from but interchangeable with the national currency, and (iii) introducing Social Funds, ie budgets for specific purposes, which are accountable to democratic decision-making. In the future, formal meetings will be needed not to debate how to run the system - that has been established long ago, and the software ensures consistency of practice - but what budgets are available for community activities, which could include volunteering on TT projects.

LETS organisers are therefore advised to review their own procedures and processes, and if necessary get help with technical and governance issues. When you create a local currency, make sure it is really local and independent. If a local printed currency is already being used in your Transition Town, use the vouchers on trading days and accept them as cash in exchange for local credits. If Transition Town activists won't go to you, simply accommodate them. When the first flush of enthusiasm is gone and volunteering energy has run low, in the context of mainstream economic downturn, the ability to create currency by local consensus from a deep local source, will come into its own. Remember, you read it here first!

Mary Fee©2009 (First draft 12/8/2009, updated 27/8/2009)

© Published by LETSlink UK, 12 Southcote Road, Tufnell Park, London N19 5BJ