Vision for HANDS

by Christoph Hensch, Nov 2002

HANDS (How About Non Dollar System) has been in operation in Golden Bay for many years. It seems the time is right to transform and extend HANDS from a simple LETS to a complementary local currency, based on the mutual credit system. Since a LETS is already a mutual credit system, we wouldn’t have to make any significant changes to how HANDS works, except that the form of the HANDS that are used is changed.

The most obvious change would be the use of cash “vouchers” or “notes.” Members could issue the amount of vouchers up to their debit limit. Members choosing to continue to use the old transaction slips would be welcome to do so. Each member keeps his/her account as until now. (A similar system has been introduced by the BMT LETS in northern New South Wales, Australia.)

The vouchers or notes have an expiry date. They are handed out by the system’s accountant. If someone accumulates a huge amount of notes, then they could be credited to his/her account.

Advantages of the system:
1. A trade could be carried out much easier, just by handing over a voucher. Members know immediately where they are at.
2. Less work for the accountant; transactions no longer need to be registered.
3. Non-members could start participating in HANDS trades without the immediate need to commit themselves to membership.
4. Businesses might find it easier to trade with notes than with a cumbersome accounting system.
5. The notes could be artistically designed and printed, and thus attract collectors.

The tourist HANDS could be sold at the tourist information centre and/or other points of sale. (Even though HANDS are not $, and therefore cannot be exchanged, a system could be set up whereby HANDS that have been bought against Kiwi $ can be changed back at 90% value. The remaining 10% would go toward financing the scheme, a local enterprise start-up fund, or to some charitable purpose. HANDS could only be changed back into Kiwi $ with a receipt of purchase - only those HANDS that have been purchased are backed by conventional dollars!)

Introduction of the vouchers
It seems advisable to have a pilot phase first to get to know the mechanics of using vouchers. A pilot phase would also give the membership the opportunity to debate the pros and cons of a new system.
Therefore, only a fraction of the possible debit limit would be converted to vouchers.

Dec 2002 Issue a provisional set of notes/vouchers as a pilot scheme, valid till Nov 2003.
Sep 2003 Issue of a first set of nicely designed notes, valid till Nov 2004
From then on a yearly issue of new vouchers/notes follows. Old vouchers could be exchanged 1:1 into the new vouchers until two months after the issue of the new series. Until six months after the issue of the new series, they could be changed at 2 (old) : 1 (new). Beyond that the old vouchers would be worthless.

Organisation
To earn and keep the confidence and trust of the community, a steering committee or board would be set up to supervise the issue and handling of the currency.

During and following the pilot phase, active work needs to be done to recruit businesses into the system. If the “Tourist HANDS” are to work, many of the tourism operators of the region need to participate.

To promote better contacts among the membership and to give new members easier access, a regular casual meeting could be set up, for example, Tuesdays, 5 to 7 p.m., with free coffee, with someone from the system always present to do any explanatory or administrative work.

Challenges
Obviously, all the legal aspects of such a project still need to be researched. HANDS vouchers need to be significantly different from the conventional money so that there is no danger of confusion.

Ideally, over the long term, a systems administrator should be employed, either part-time or even full-time (funding needs).

Options
Loans and capital. People and enterprises who accumulate a large amount of HANDS could put them onto a “capital account.” The amount that accumulates there could be used for loans to members.
The difference between HANDS members and non-members is that only members would be eligible to receive loans. In actual fact, by being member of a mutual credit system, the accorded debit limit is already a loan.

Timebanking. Parallel to HANDS a timebanking system could be set up - HANDS members automatically get a second account in hours.

The Big Vision
Eventually, the HANDS complementary local currency would have to expand beyond Golden Bay. In cooperation with other, already existing LETS, the system could cover the whole of the North of the South Island, from Golden Bay to Picton! That would be a large enough area and population to sustain a local economy and a strong local currency.

As time goes on, HANDS could also be used with smartcards. A system could be established whereby each member receives a smartcard and a smartcard reader. The reader is configured to allow the insertion of two cards at the same time, with the option to transfer units from one card to the other. The “account” would be directly on the smartcard - and there wouldn’t be any transfers of transaction details to a central computer.


Dec 2004 - what has happened since
The idea of issuing vouchers as a part of a functioning LETS has met quite strong criticism from some people. It is not the orthodox way of doing things, and fear was expressed that the systems administrator would lose control over the amount of currency in circulation. Also, it was argued that it would be very difficult if not impossible to ascertain the the health and volume of trading happening within the exchange.

I admit that it is very important to keep track of how many vouchers are brought into circulation and that individual people's accounts still need to be kept. True, there will no longer be statistics on trading volume, but the benefit of easier access to HANDS will outweigh the lack of statistical data.

HANDS has committed itself to introducing vouchers. As a first step, "Market HANDS" were introduced one year ago. They met with unanimous approval. A local artist is now designing notes that will hopefully soon be printed and brought into use.