#### STICHTING BAKENS VERZET

#### 1018 AM AMSTERDAM, THE NETHERLANDS

Director,

T.E.(Terry) Manning,

Schoener 50,

1771 ED Wieringerwerf,

The Netherlands.

Tel: 0031-227-604128

Homepage: http://www.flowman.nl

E-mail: (nameatendofline)@xs4all.nl : bakensverzet

## MODEL FOR SUSTAINABLE SELF-FINANCING INTEGRATED RURAL AND POOR URBAN DEVELOPMENT FOR THE WORLD'S POOR

Incorporating innovative social, financial, economic, local administrative and productive structures, numerous renewable energy applications, with an important role for women in poverty alleviation in rural and poor urban environments.

"Money is not the key that opens the gates of the market but the bolt that bars them"

Gesell, Silvio The Natural Economic Order

Revised English edition, Peter Owen, London 1958, page 228

Edition 12: 02 November 2006

(EN FRANÇAIS)

### 04.14 HOW A LOCAL MONEY LETS SYSTEM WORKS

The local exchange trading (LETS) system foreseen will be set up during Moraisian organisational workshops.

The following texts, drawings and graphs form an integral part of this project proposal. They indicate the type of structure which can be expected to come out of the workshops.

DRAWING OF INSTITUTIONAL STRUCTURES.
DRAWING OF LETS STRUCTURES.
HOW A LETS TRANSACTION WORKS.
A simple introduction to local money systems.
Information package LETS LINK UK.

In principle, (one, two, three or four ) local LETS currency systems will be set up (according to clearly definable operating areas. )

All adults within a system should be registered as members, but use of the system with exceptions for goods and services necessary for the project itself, would be voluntary. Any member may usually freely choose whether to conduct a given transaction in the local currency system or within the formal currency system.

The LETS group(s) will have (30.000) registered adult members. Bearing in mind the recommendations of the international convention on the rights of children, children under the age of (14) will not be registered. They will become registered members of their local LETS systems upon reaching the age of (14). The members of each group will be coded so that their and tank-commission and well areas can be identified and the cost of more local, optional, initiatives such as PV lighting for study purposes debited to the members directly involved rather than to the whole project area.

A "catalogue" of goods and services is prepared periodically in a form which can be understood/read by the group members. Which goods and services are available in the project area and who provides them is already widely known at local level.

The reference value of the local money system will be decided with the local population. It will probably be based on the perceived value of an hour’s work. (Since the local LETS currencies will have the same reference value, they can be transferable from one to another. However, not all goods and services will be transferable between the different systems, as this could lead to a drain of resources from one system to another.) LETS systems work best when the financial resources remain balanced within each system. The LETS coordinators and the members will decide which goods and services are "exportable". Gypsum composite products made in group A, for instance, could be exportable to group "B". Cloth made in group "B" may be exportable to group A. Crops and vegetables not grown in one group could be importable from the others.

Assume that a gypsum composite product is sold by a group A member to a group B member. The transaction would be in local currency A. The gypsum composite product manufacturer would be credited in local currency A. The coordinator of group A would advise his counterpart in group B of the debit for the group B member and separately credit group A with the same amount in group B currency. The group B coordinator would debit the group B buyer in local currency B, and, separately, debit group B with the same amount in group A currency. Goods and services supplied by group B to group A would be registered the other way round. The group A and B coordinators then simply eliminate the respective debits and credits by pairing value units one for one.

The following fully automated registrations take place:

1. The group A producer would be credited in local currency A.

2. The coordinator of group A would advise his counterpart in group B of the debit for the group B member.

3. The coordinator of group A would credit his group A with the same amount in group B currency.

4. The group B coordinator would debit the group B buyer in local currency B.

5. The group B coordinator would debit his group B with the same amount in group A currency.

6. Goods and services supplied by group B to group A would be registered the other way round, following the procedures described in steps 1) to 5).

7. The group A and B coordinators then simply eliminate the respective debits and credits by pairing value units one for one.

8. In case of a (large) remaining credit balance of one of the two groups at the cost of the other, the coordinators will take whatever steps necessary to bring the balance of the accounts as close as possible back to zero as quickly as possible. There are many ways of doing this. Allowing extra goods and services to be exported from the debtor system to the creditor system is one way. Organising markets or fairs with debtor area products in the credit area is another. Organising tourist outings of creditor area residents in the debtor area is another.

The processes broadly follow traditional balance of payments transactions but the objective is to maintain a balance in imports and exports. A large debit balance between one LETS group and another would show resources are being transferred from one group to another. The coordinators would then have to take steps to correct the imbalance. They could, for example, temporarily extend the range of goods and services the debtor group can export to the creditor group, such as by arranging a special market.

It is a key to the success of the system that the imports and exports of each group remain balanced, their sum tending to zero.

There will be an elected local LETS coordinator in each tank commission area. The LETS coordinator will need to be literate and will be responsible to the general LETS systems coordinator. The local coordinators will help those members unable to write/sign their cheques (or deal with other methods of payment), arrange distribution of chequebooks (or other payment forms)to the LETS users, collect the used cheques (or equivalent) deposited in the LETS POST box near the local water tank and take them to the LETS systems coordinator at well-commission level for registration. The local coordinators will also display the monthly or weekly reports on the LETS NOTICE BOARD near or above the LETS POST box, advise illiterate members of their LETS balances, call a fortnightly or monthly meeting where the users can discuss the operation of their LETS system, make special requests (such as, for example, increasing the debt limit for sick members or for those making special purchases), and discuss ways to use the goods and services of those with high debts so as to help balance their trading accounts. The local coordinators will also discuss with the members selected proposals for allowing export and import of goods and services into the local LETS system and report back to the general LETS coordinator.

(The first general LETS systems coordinator will be chosen by the Project Administrator.) The LETS system coordinator and the locally elected LETS coordinators at well-commission level will make up the LETS MANAGEMENT COMMISSION. The commission will meet at least once a month to discuss particular problems and to decide on actions needed to balance the export/import accounts amongst the various local LETS currencies.

The fortnightly/monthly reports for members in each tank commission area are in the public domain. They will be published on the local LETS NOTICE board and discussed at a general meeting of the local members. The report will show, for each member, the previous balance, the current balance, the total number of plus transactions and minus transactions conducted. Lists of plus and minus transaction since the previous report can be supplied on request..

The cheque (or other transaction form used)will have three parts. Each part will have the member's name and LETS number pre-printed on it. The SELLER'S cheque is used in each transaction. The BUYER’S name and system code are filled in on the cheque, with the assistance of the local coordinator where necessary, as well as a description (with LETS code) of the goods or services sold. Finally the cheque is signed by the buyer and deposited by the seller in the LETS post box. The amount credited to the seller must always be exactly the same as that debited to the buyer(s). The second “slip” is a memo for the buyer. The first “slip” is a memo for the seller.

Payments for LETS services provided by members to their communities or to specific groups such as clubs will be debited to a special LETS code for the community or club. When the community or club debt reaches one LETS currency unit (or other agreed amount) for each member, each member will be debited with that amount. The community or club LETS code will then be credited by the same total amount. This system allows collective communal property to be involved in the LETS transactions. For example, the sale of wood from communal land can be registered as a credit to the LETS group involved, and then transferred from there to individual group members.

Forward: effects of inflation.

Back: taxation and the local money systems.

Menu work files group 4: The project goals and the expected results.

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Complete index of the project work files.

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