§ Mr. Gordon PrenticeTo ask the Chancellor of the Exchequer what estimates he has made about the percentage of currency trading in the London financial markets which is necessary for settling accounts in traded goods and services.
§ Mr. NelsonThe Bank of England has estimated, in the NovemberQuarterly Bulletin, that daily turnover of foreign exchange trading in London is around $300 billion. However, it is not possible to estimate the value of trade in goods and services to which this is related because a large but indeterminate proportion of foreign exchange trading in London is connected with trade between third countries. Furthermore, it would be misleading to suggest that the only foreign exchange transactions necessary for trade in goods and services are those settling accounts; much trade would not take place at all were the foreign exchange markets not able to facilitate the hedging of currency risks associated with trade and with investment.