|
|
Theory
of Complementary/Community Currencies
This page is under development - amendments
and additions to follow - and comments are welcome. Please note
that we do not go into technical methodologies here but only deal
with the "principles" by which these systems work. Research
on LETS in the 1990s found that the majority of LETS trading was
in "equal-time". Timebanks avoid confronting the financial
system by speaking only about time being exchanged.
|
How a LETS works
|
|
A LETS operates by Mutual
Credit (ie currency is created by the members themselves
as they transact) in a local currency equivalent to the
national currency. A LETSystem is quite similar
to commercial barter, but in a LETScheme the organisers
work according to a co-operative self-help model. They publish
Offers & Wants listings, arrange Events, and share the
administrative tasks.
The diagram illustrates the end-point of a series of transactions:
Fred does a task for Sue who pays him. Joe sells vegetables
to Fred who spends some of his credit. NB the hourly rate
may vary. The System Account which
funds administrative tasks receives an input from the members
in the form of subscriptions, transaction fees or commissions
so that the system is self-supporting.
NB In the LETsystem the sum of all accounts - and that includes
the system account - is zero. No interest is charged for
debit accounts, but a demurrage charge (for static accounts)
is a theoretical option - rarely practised because it would
require a more robust transaction system than most LETS
have. A Community Chest may also receive regular tithing
and occasional donations, to support help given to disabled
members. The system account is not
aware of transactions having occurred until they are recorded
in member accounts.
|
| Units |
System
|
Fred |
Sue |
Joe |
| 50 |
|
|
|
|
| 40 |
|
|
|
|
| 30 |
|
|
|
|
| 20 |
|
|
|
|
| 10 |
|
|
|
|
zero
_________________
| 10 |
|
|
|
|
| 20 |
|
|
|
|
| 30 |
|
|
|
|
| 40 |
|
|
|
|
| 50 |
|
|
|
|
| Units |
System
|
Fred |
Sue |
Joe |
|
| How a Timebank
works |
The Timebank
rewards members who do good deeds for themselves or the Community
with Time Credits. Terminology is a little confusing here.
The BBC Timebank issues a fiat currency expressed as hours
to reward volunteering. The Timebanks UK model rewards members
for engaging in community, teaching or learning activities,
but also encourages "give and take" between the
members: a paid "broker" responds to requests from
members and matches them to those offering help.
The diagram describes the same set of trades as above, in
a modifed way: When Sue needs help she calls the Broker who
arranges for Fred to do the task and later transfers time-credits
to his account from her account. In theory Joe can't sell
his vegetables as there is no way of recording their value,
but if the Timebanks issues "vouchers" these begin
to accrue a monetary value.
No system account is needed as the administration is paid
for by external funding. Time-credits are created as required
but require some form of "authority" to organise
and approve the activities. The activities of members are
known in advance to the Timebroker, and the organisation takes
care over issues of identity, police-checking, insurance,
access to vulnerable members, and keeping a record of what
has taken place.
|
| Hours |
Fred |
Sue |
Joe |
| |
|
|
|
| 5 |
|
|
|
| 4 |
|
|
|
| 3 |
|
|
|
| 2 |
|
|
|
| 1 |
|
|
|
zero______________
| 1 |
|
|
|
| 2 |
|
|
|
| 3 |
|
|
|
| 4 |
|
|
|
| 5 |
|
|
|
| Hours |
Fred |
Sue |
Joe |
|
|
VARIATIONS of the LETS Model
LETSystems take transaction fees,
either flat-rate or commission-based, and management is
non-representative. LETSchemes take regular
subscriptions and are co-operatively run. Another
option is demurrage (levying inactive accounts). LETS may
have a mixture of these methods. Administration may be centralised
or devolved using web-transactions. Passbooks and/or vouchers
may facilitate face-to-face transactions.
SIMILARITIES between Timebanks and LETS
Many LETS members prefer to work for an equal rate of pay
and many schemes are either constituted on this basis or
suggest a standard rate to be used as required. Some schemes
have "brokering" as one of the administrative
tasks which can be devolved by type or location.
Combined Time-LETS Models
A number of LETS organisers are now working on combining
LETS and Timebanks as described above. The new models range
from simply working side-by-side and sharing resources to
truly integrated hybrids. We are particularly pleased to
hear news of such schemes so that we can build up some "road-tested"
options.
|
|
|
See Comparison with Mainstream Banking - paper
in draft
|
|
|
Queries?
News?
Want to join?
CONTACT
|
|