SWIFT & International
Nostro / Vostro Account
A nostro account (from the Latin "ours") is a bank account that one bank holds at another bank, denominated in the foreign bank's local currency. The mirror image is a vostro account ("yours") — the same account viewed from the perspective of the bank holding the funds. Together, nostro and vostro accounts form the plumbing of correspondent banking.
When Bank A in Germany needs to send US dollars to Bank B in Brazil, Bank A uses its nostro account (held in USD at a correspondent bank in the United States). Bank A instructs the correspondent to debit its nostro account and credit the relevant account for Bank B. The correspondent sees the same account as a vostro account held on behalf of Bank A. Banks must keep their nostro accounts funded with sufficient balances to cover expected payment flows, and they reconcile these accounts daily against statements received via the SWIFT network.
Nostro and vostro accounts are the mechanism that makes cross-border payments possible without a single global bank. Every international wire transfer ultimately settles by debiting and crediting these accounts between correspondent banks. Understanding them explains why international transfers require pre-funded liquidity, why they can fail if a nostro account lacks sufficient balance, and why transaction fees accumulate across multi-hop payment chains.
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