DEFINITION of 'Local Exchange Trading Systems'
A locally organized economic organization that allows members to participate in the exchange of goods and services among others in the group. Local Exchange Trading Systems (LETS) use a locally created currency as denominations of units of value which can be traded or bartered in exchange for goods or services. Members of LETS typically view the systems as organized and cooperative schemes that maximize purchasing power while benefiting members and the community.
BREAKING DOWN 'Local Exchange Trading Systems'
Local Exchange Trading Systems typically exhibit five fundamental traits: cost of service, consent, disclosure, equivalence to the regional currency, interest-free. These traits along with general guidelines such as membership fees, detailed logs of transactions and member directories allow for an organized and well run exchange. Additionally, transactions do not necessarily require a nominal exchange of units. For instance, members can repay other members who have performed for them a service by providing a service in return, as opposed to paying for the original service.