Nostro Account

A nostro account is an account a bank holds at a bank in another country, denominated in that country's currency, so it can make and receive payments in that currency.

How it works

The name comes from the Latin for "ours": it is "our account with you". The same account seen by the bank holding it is a vostro account, "your account with us". A UK bank that needs to pay in yen keeps a nostro account at a Japanese bank. When a customer sends yen abroad, the UK bank debits its nostro balance in Japan and instructs the Japanese bank to pay the recipient, typically by SWIFT message.

The catch is prefunding. The money has to be in the account before the payment goes out, and it has to arrive before the local market's cut-off, often in another time zone. Worked example: a bank expects up to $50 million of daily outflows in one corridor and keeps two days of flow as a buffer, so $100 million sits in that nostro account. If the same money could earn 4% in short-term government securities, the buffer costs $4 million a year in forgone return, for one corridor. A bank or payment firm active in 20 currencies carries that cost 20 times over.

Why it matters

Nostro balances are one of the main hidden costs of cross-border payments, and managing them is a daily treasury job: forecasting outflows per currency, funding accounts before each cut-off, and reconciling every payment against the correspondent's statements. Fund too little and payments fail or the account goes overdrawn. Fund too much and capital sits idle. That is why settlement assets that move around the clock interest bank treasurers: if funds can arrive when a payment is due, smaller buffers are needed. The saving only appears if conversion and liquidity are available at the destination at the moment they are needed. For how stablecoin settlement compares with card and bank rails, see stablecoin settlement vs card rails.

Related terms

• Vostro account
• Correspondent banking
• Prefunding
• Intraday liquidity
• Reconciliation

Frequently asked questions

What is the difference between nostro and vostro?

They are the same account from two sides. Nostro is the holding bank's view, our money at your bank. Vostro is the host bank's view, your money with us.

Why do banks prefund nostro accounts?

A payment can only be made from a balance already in the account, before the local cut-off, so banks keep buffers to cover expected outflows in each currency.

What does a nostro buffer cost?

Mainly forgone return. A $100 million buffer that could earn 4% elsewhere costs about $4 million a year, before operational and reconciliation costs.

Read the research behind this. Start with the FXC Intelligence and Allium report on stablecoins in cross-border payments, then see how Allium measures organic payment volume.

Allium provides onchain data infrastructure. Companies named in this article may be Allium customers, prospects or commercial counterparties. The authors and other Allium personnel may hold positions in the assets discussed. This article is informational only and is not investment, legal or tax advice. Data and information last reviewed: November 4, 2026.