Nostro Account

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What is a 'Nostro Account'

A nostro account is a bank account held in a foreign country by a domestic bank, denominated in the currency of that country. Nostro accounts are used to facilitate settlement of foreign exchange and trade transactions. The term is derived from the Latin word for "ours." Conversely, accounts that are held by the domestic bank in its home country for foreign banks are called vostro accounts, derived from the Latin word for "yours."

BREAKING DOWN 'Nostro Account'

For example, a U.S. bank may have nostro accounts with one or more Canadian banks. These accounts will be denominated in Canadian dollars, which enables efficient settlement of transactions that are Canadian dollar denominated. Nostro accounts also minimize the exposure of the U.S. bank to undue exchange rate risk.

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RELATED FAQS
  1. What is the difference between a Nostro account and a regular bank account?

    Read about the differences between a nostro bank account, vostro bank account and the standard commonly used demand deposit ... Read Answer >>
  2. Where did the term 'Nostro' account come from?

    Discover where the term "nostro account" came from and how, since its Renaissance foundation, its meaning has evolved to ... Read Answer >>
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