Local Exchange Trading Systems

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.

RELATED TERMS
  1. Fiscal Localism

    Institutionalized monetary exchange focused upon local and regional ...
  2. Local

    Traders on future exchanges who may fill public orders occasionally, ...
  3. Fourth Corner Exchange

    An alternative monetary exchange system based in the Pacific ...
  4. Currency Exchange

    A business that allows customers to exchange one currency for ...
  5. Exchange

    A marketplace in which securities, commodities, derivatives and ...
  6. Barter

    The act of trading goods and services between two or more parties ...
Related Articles
  1. Professionals

    Financial Professionals: The Benefits Of Joining An Association

    Make a name for yourself among your industry peers by joining a professional association.
  2. Investing

    What's an Exchange?

    An exchange is an organized marketplace where securities and other financial instruments are traded.
  3. Markets

    Macroeconomics: Currency

    By Stephen Simpson For citizens of different countries to conduct trade, they have to buy and sell each other's currencies. The price of a nation's currency, expressed as an amount of a second ...
  4. Personal Finance

    The Worst Place to Exchange Currency

    Exchanging currency is a necessary part of traveling, but not all currency exchanges are created equal.
  5. Trading

    Dual And Multiple Exchange Rates 101

    Why would a country choose to implement dual or multiple exchange rates? It's risky, but it can work.
  6. Investing

    Here's How You Calculate An Exchange Rate

    Struggling to get a grasp on exchange rates? Here's what you need to know.
  7. Investing

    Explaining Fixed Exchange Rates

    A government using a fixed exchange rate has linked the value of its currency to the value of another country’s currency, or the price of gold.
  8. Financial Advisor

    Preparing Finances For Deployment: A Guide For Service Members

    Those who follow the instruction in this article can look forward to a homecoming of financial prosperity.
  9. Investing

    Explaining Foreign Exchange Risk

    Foreign exchange risk is the chance that an investment’s value will decrease due to changes in currency exchange rates.
  10. Trading

    Dollarization Explained

    Find out how fledgling economies can find some stability in their currency and attract foreign investment.
RELATED FAQS
  1. What is the difference between barter and currency systems?

    Learn the difference between barter and currency systems in the trade of goods and services. Why is currency preferred over ... Read Answer >>
  2. What are some examples of barter transactions?

    Learn how bartering involves the provision of goods or services in exchange for other goods or services, and review different ... Read Answer >>
  3. How and where is revenue recognized from barter transactions?

    Find out how the IRS requires companies that engage in barter transactions to recognize the revenue from such transactions ... Read Answer >>
  4. How can bartering result in a more optimal allocation of resources?

    Learn how bartering helps with resource allocation, managing trade deficits and exchanging goods. Review how individuals, ... Read Answer >>
  5. What are the differences for barter transactions recognition between IFRS and USGAAP?

    Understand the key differences between how the IFRS and the U.S. GAAP accounting systems recognize and record barter transactions ... Read Answer >>
  6. Are barter transactions taxable?

    Learn what a barter transaction is, how the IRS requires businesses to report barter exchanges and tax implications of barter ... Read Answer >>
Trading Center