localexchange

Local exchange refers to community-based systems that enable people to trade goods and services without using national currencies, often through a local unit of account such as time credits or local scrip. The most common form is a Local Exchange Trading System (LETS), a mutual-credit network in which members earn local credits by providing goods or services and spend credits to obtain offerings from others. Balances are recorded in a ledger and designed to stay within the network; some implementations allow negative balances up to a limit to encourage participation.

Origins and scope: LETS emerged in the 1980s in Canada and spread to many countries, influencing related models such as time banking, which centers on exchanging hours of service. Local exchange networks typically operate at a neighborhood or town level and may coexist with or complement formal currencies.

Structure and operations: Networks are usually managed by a local coordinator or cooperative, with a roster of members and a catalog of available goods and services. Transactions are documented in a community accounting system, which may be paper-based or digital. The aim is to facilitate mutual aid, support local businesses, and strengthen social ties, while keeping value circulating within the community. Payments are not typically interest-bearing, and tax treatment varies by jurisdiction.

Impact and critique: Proponents argue that local exchange systems strengthen local resilience, increase employment opportunities, and provide access to goods and services for participants with limited cash. Critics note limited scalability, dependence on social capital, potential for value erosion if participation wanes, and regulatory or tax challenges. Sustainability often hinges on ongoing participation and a healthy level of local commerce.

See also: time banking, mutual credit, local currency, local economy.