In this paper we will discuss about the local exchange trading systems (LETS) or LETSystems. The advantages of LETS will also be discussed here. Local Exchange Trading Systems (LETS), sometimes addressed as LETSystems, are basically non-profit and local trading exchange network where printed currency is not needed for trading, that is, buy and sell, goods and services.
Scrip is not usually issued in local exchange trading system. All the transactions are made on a central platform. LETS is a kind of mutual credit system because, the network members issue credit for their own benefits. Unlike the direct batters, local exchange trading systems are “full fledged monetary system”.
Now days, many countries around the world, like South Africa, Australia, New Zealand, Japan, South Korea, the United Kingdom, France, Scotland, North American countries etc, have adopted local exchange trading system.
However, Local exchange trading systems have been fulfilling the needs of the local communities efficiently since its establishment, in 1986. In Australia, people are now using the LETS rather than the bank mortgage. They are buying home, using LETS, without bothering about any monthly interest payments.
In many countries, for example, Australia, the local exchange trading systems are considered as an initiative of social security. LETS scheme does not encourage the traders to avoid taxes rather, it entice the members to undertake their tax liabilities.
(1) Local exchange trading systems increase the purchasing power of the individuals, local services, small businesses etc.
(2) LETS helps people to save money. Therefore, a small investor can also be a member of local exchange trading systems network.
(3) Local exchange trading systems offers some other benefits like, tuition & training, social contact support for new businesses, health care etc to all classes.
(4) LETS scheme can perform well without the support from any external income sources.