Category: Basic Project Articles
Published: 29 January 2013
The Hudson Valley Currrent is a proposed local, community-based transactional system that operates outside the U.S Dollar. Its unit of exchange is the Current, which is defined as having a value equal to a U.S. Dollar but which is created through the delivery of goods and services by community members. The foundation of the system is a mutual credit network, which will start with a business-to-business (B2B) focus, and then evolve to include a business-to-consumer (B2C) function. The final step in establishing the full system as proposed will be the issuance of a printed local currency based on credits in the network. This currency could be used by anyone.
A mutual credit network functions by granting members of the network short-term credit for transactions with other network members, and operating an accounting system of credit clearing. Transactions among members create credits and debits in each member’s account, and those credit/debit balances are cleared by subsequent transactions within the network. Thus a credit clearing system is similar to multi-party barter, but with significant advantages. Early electronic systems of this sort (LETS) had minimal account controls and supervision, and they suffered serious shortcomings as a result. The HV Current plans to use a second-generation approach, based on a sophisticated software system called GETS, which addresses these shortcomings through careful monitoring of access to credit and account behavior over time.
It is important to see how such a network not only builds a sense of local economic community (a primary goal of all such systems), but also very directly and powerfully creates enhanced economic opportunity for its members. Establishing an interest-free, community monitored, credit system removes a huge set of barriers for vibrant expansion of prosperity within the exchange economy. Those who come to see this will not need a lot of convincing. They will simply start using it.
As the system evolves we are also committed to using it to bring new opportunities to underserved and underprivileged segments of society. Though the initial approach is by necessity one of building a cautious, B2B foundation, this system actually has a great—and quietly radical—potential for bringing greater economic justice, stability, and wellbeing to our region as a whole.