The Committee on the Working of the Monetary System in its Report referred to changes in the terms of commercial credit, or 'leads and lags' in the times of settlement in international trade, as being of particular importance amongst the group of short-term movements which can bring pressure to bear on the UK reserves of gold and convertible currencies. The Committee thought that changes in the times of settlement, by delaying or accelerating movements of foreign exchange, could have a marked effect on the reserves without there being any change in the underlying balance of visible trade and services. Because of the very large turnover of trade between the United Kingdom and the rest of the world, small changes in the times of settlement might have significant effects. The Radcliffe Committee concluded that too little was known about this and that a study of the methods by which British exports and imports were financed would throw light on the problem.
Leads and lags in overseas trade