Director,
T.E.(Terry)
Manning,
Schoener 50,
1771 ED
Wieringerwerf,
The
Tel:
0031-227-604128
Homepage:
http://www.flowman.nl
E-mail:
(nameatendofline)@xs4all.nl : bakensverzet
and
"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,
“Poverty is created scarcity”
Wahu Kaara, point 8 of the Global Call to Action Against Poverty, 58th
annual NGO Conference, United Nations,
06.24
LOCAL MONEY LETS STRUCTURES
06.24.1 Introduction
The local exchange trading (LETS) systems foreseen will be set up during
Moraisian organisational workshops described below in section 06.24.7
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 SHORT LETS COURSE.
Detailed information on LETS systems
For
this project, one local LETS currency system will be set up in the project
area.
06.24.2
Description of the local money system.
All
adults within project area 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 will have about 50000 registered adult members. Children under the
age of 14 will not be registered as they are not, under the international
convention on the rights of children, allowed to work. They will become
registered members of their local LETS systems upon reaching the age of 14. The
members of the 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. In the various project areas
what is available and who provides it will often be widely known at local
level.
All
the local LETS currencies within the region of which the project area is part
will have the same reference value. This will be decided with the local
population for this project, as it is serves as pilot project for the region.
06.24.3
Trading activities.
The
reference value will normally be based on the perceived value of an hour’s work.
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 general LETS systems
coordinator 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
locally elected LETS coordinators will make up the LETS COMMISSION at
well-commission level. The LETS COMMISSION at well-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.
Each
of the 66 LETS COMMISSION at well-commission level will nominate a members to
the Central LETS Committee. The Central LETS committee will nominate a small
LETS management team and control its activities. The management team is
responsible for general management of the system and decides on actions needed
to balance the export/import accounts amongst the various local LETS currencies
(where they are present).
The
fortnightly/monthly reports for members in each tank commission area 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, and list each plus and minus transaction since the
previous report.
The
fortnightly/monthly well-commission level reports will be published on the
local LETS NOTICE board at well-commission level and at individual tank
commission 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, and list
each plus and minus transaction since the previous report.
The
fortnightly/monthly project level reports will be published on the local LETS
NOTICE board at the central offices at well-commission level and at individual
tank commission 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, and
list each plus and minus transaction since the previous report.
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 BUYERS 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 BOTH parties and deposited in the LETS post box. The
amount credited to the seller must be exactly the same as that debited to the
buyer. One stub is for the seller, one
stub is for the buyer, and the main section is for the project.
Special
provision will be made for small frequent transactions (transport, markets
etc).
06.24.4
Trading activities involving collective interests.
Payments for LETS services provided by members to their communities will
be debited to a special LETS code for the community. When the community debt
reaches one LETS currency unit (or other agreed amount) for each member, each
member will be debited with that amount. The community 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.
06.24.5
Trading activities involving collective interests.
In principle, competition within a local money system is viewed
positively. However, users will be
encouraged to diversify their production and to relate it to the needs of local
consumption. Each local economy system
is intended to be as autonomous as possible. Production units should be kept
small, as near to the end consumers as possible with as few working passages as
possible. Financial and parasitic services such as packing, transport,
advertising, large-scale distribution costs should be limited. Solidarity services, including insurance and
social security, are local and cooperative.
The structures provided are open balanced systems within
which private initiative and genuine competition can flourish and financial
leakage is inhibited.
06.24.6
Trading activities amongst LETS groups.
06.24.6.1
Presentation
There
will be just one system in the project area. In the future, other systems in
other project areas may be formed. In this case the various systems can trade
with each other.
As
already stated above, the reference value will normally be based on the
perceived value of an hour’s work. Since the local LETS currencies in the region
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.
06.24.6.2
A transaction between one group and another.
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 registrations take place:
a)
The group A producer would be credited in local
currency A.
b)
The coordinator of group A would advise his
counterpart in group B of the debit for the group B member.
c)
The coordinator of group A would credit his group A
with the same amount in group B currency.
d)
The group B coordinator would debit the group B buyer
in local currency B.
The
group B coordinator would debit his group B with the same amount in group A
currency.
e)
Goods and services supplied by group B to group A
would be registered the other way round, following the procedures described in
steps a) to e).
f)
The group A and B coordinators then simply eliminate
the respective debits and credits by pairing value units one for one.
g)
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.
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.
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.
06.24.6.3 Illustration of a local money transaction between
two systems
Alpha
lives in local money system area A. His system uses local money units
called “argents”. He has a current
balance expressed in argents of 600.
Beta
lives in local money system area B. Her system uses local money units
called “busybees”. She has a current
balance expressed in busybees of 600.
The
perceived value of an hour’s work in local money system A is 10 argents per
hour.
The
perceived value of an hour’s work in local money system B is 10 busybees per
hour.
100
argents are therefore worth 100 busybees.
Local
money system A has a credit with local money system B of 65000 argents.
Local
money system B has a debit with local money system A of 65000 argents
Local
money system B has a credit with local money system A of 10000 busybees.
Local
money system A has a debit with local money system B of 10000 busybees
Alpha
sells a cow to Beta.
Alpha
is the seller. He works with “argents”.
Transactions
are always made in the seller’s units.
The
transaction is therefore expressed in “argents”.
The
agreed price for the cow is 100 “argents”.
The
seller always prepares the transaction document.
Alpha
therefore prepares a transaction slip for the sale of a cow for 100 argents
with Beta as buyer.
Beta
signs the transaction slip, and receives a confirmation note.
Alpha
deposits the transaction slip in a LETS transactions box. He keeps a
confirmation note.
06.24.6.4 Registrations involved in a local money
transaction between two systems
a) Alpha is credited with 100 argents. His balance passes from 600 argents
to 700 argents.
b) The coordinator of group A advises his counterpart in group B of Beta’s debit of 100 argents.
c) The coordinator of group A credits his group A with 100 argents. Group
A’s credit in argents with group B then passes from 65000 to 65100.
d) The group B coordinator would
debit the group B buyer, Beta, in local currency B, busybees. Beta’s balance
would therefore pass from 600 to 500.
e) The group B coordinator would
debit his group B with the 100 argents.
Group B’s debit in argents would then pass from 65000 to 65100.
f) Since no transaction in group B
currency busybees has taken place, B still has a credit of 10000 busybees with
group A, and group A has a debit
of 10.000 busybees with
group B.
g) Periodically, the group A and B
coordinators then simply adjust their respective trading debits and credits by
pairing value units one for one. In this example, group A has a balance of
65100 credit argents with group B , and group B has a balance of 10000 busybees
with A. They can be paired off, so that group A finishes with a credit balance
of 55100 argents and B a debit of 55100 argents, and groups B and A have
balances of 0 busybees.
Goods and services supplied by group B to group A would be registered
the other way round, following the procedures described in steps a) to e).
06.24.6.5 Reconciliation of accounts between two
systems
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 back towards 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.
In the case above, group A has a credit balance left over of 55100 argents. The coordinators of groups A
and B may therefore choose to organise the participation of some group B
producers at markets in the group A area to sell group B products to group A
users to “clean up” the credit of 55100 argents by selling mosquito nets in area
A for a value of 60000 busybees. To do this they would usually choose products
which are not in competition with group A products.
At the next reconciliation, group A, which has not in the meantime had
any more transactions in argents with group B, still has a credit of 55100
argents with group B and group B a debit of 55100 argents with group A. In the
meantime, group B has sold mosquito nets for a value of 60000 busybees to group
A. They can be paired off, so that group B finishes with a credit balance of
4900 busybees and group A a debit of
4900 busybees. Groups B and A then have balances of 0 argents.
It will be seen that:
Between periodic reconciliations, each group will have a credit balance
in its own local currency with the other group and a negative balance in
the other group’s currency.
On periodic reconciliation, there will normally be credit and matching
debit balances in either one of the two local money currencies. The second
currency balance must be zero. In the above example, group B finishes with a
credit balance of 4900 busybees and group A with a debit balance of 4900
busybees. Their argents balances are 0.
It is theoretically possible, but obviously extremely unlikely, that, on
periodic reconciliation, the balances for groups A and B of both local
money currencies be 0. Given the complexity of trading between local money
systems, it is reasonable and normal there be a credit balance and a
corresponding debit in either one of the two local money currencies involved.
Where exchanges are seasonal in character, the balances may become quite large,
as they can be allowed to follow natural production flows. This means that
while the balances of the local currency groups are expected to tend towards a
zero balance on periodic reconciliation, the system is in fact extremely
flexible. Local money system managers make decisions on inter-group import
and export on the basis of opinions and wishes expressed by users at
well-commission and tank- commission levels.
In principle, competition within a local money system is viewed
positively. However, users will be
encouraged to diversify their production and to relate it to the needs of local
consumption. Each local economy system
is intended to be as autonomous as possible. Production units should be kept
small, as near to the end consumers as possible with as few working passages as
possible. Financial and parasitic services such as packing, transport,
advertising, large-scale distribution costs should be limited. Solidarity services, including insurance and
social security, are local and cooperative.
In principle, competition amongst local money systems is
discouraged. Inter-group trading is
related to specialisation and diversification of products and services.
The structures provided are open balanced systems within
which private initiative and genuine competition can flourish and financial
leakage is inhibited.
06.24.7 Workshop for the creation of the local
money system
For detailed information on LETS systems see:
09.16 A short LETS course.
09.17 Detailed information on LETS
systems
One Moraisian workshop will be held.
Indicative participation:
The Moraisian trainers
A member of the project coordination group
Consultant Terry Manning
2 representatives of the ONG Project New Horizons for Kiogoro
Representative of the Finance Ministry
Representative of the Rural Development ministry
At least 5 observers (possible coordinators for future projects)
132 persons, indicated by the well commissions, who will have indicated their
interest in registering transactions
297 persons (men and women) indicated by the Tank Commissions interested in
taking responsibility for the management of the LETS systems at tank commission
level.
Duration of the workshop: about six weeks.
The Workshop will be expected to produce the
following structures:
a) Definition of the social form of the LETS
structures
- statutes
- rules
- professional and administrative structures
- financial aspects
- relationships with other non-formal local money systems
b) Structure for the registration of
transactions
- physical working space (offices)
- adaptation of environments against weather and dust
- safety and back-up procedures to protect information
- purchase of computers, printers, equipment for registration of members et
electrical connections eventually using PV
- distribution of physical structures: LETS boxes, notice boards
- preparation of cheques or other instruments of exchange to be used
- publication of the services available within the system
c) Coordination with users
- preparatory meetings with users at tank commission level
- presentation of the local coordinator
- registration of members
- distribution of cheques or other instruments of exchange
- starting transactions
d) A communications structure
- vertical, at project level (project coordination team, Cooperative New Horizons
for Kiogoro, transaction registrars, those responsible at tank commission
level, users)
- horizontal, with the various persons responsible at the same level (amongst
transaction registrars, amongst tank commission level operators)
- horizontal, amongst local money systems
- commercial, radio, website
Next file :
06.25 Creation of the micro-credit system
structures.
Back to:
06.23 Creation of the local social
structures.
