Correspondent banking vs Nostro account: what is the difference?
Correspondent banking is the relationship: one bank holds deposits for other banks and provides payment services. A nostro account is the account at the centre of it, seen from the bank that owns the money.
| Correspondent banking | Nostro account | |
|---|---|---|
| In one line | Correspondent banking is an arrangement in which one bank holds deposits owned by other banks and provides them with payment and other services. The CPMI calls it an essential component of the global payment system, especially for cross-border transactions. | Nostro account means an account a bank holds with another bank, usually abroad and in foreign currency. Nostro is Latin for 'ours': the owner sees it as 'our account with you'. |
| Read more | Correspondent banking | Nostro account |
How they work together
A payment company's cross-border wires usually pass through correspondent banks, and its balances abroad often sit in nostro-style accounts at them.
Where Polynopsis fits
Polynopsis reads balances held with correspondent banks from their statement files, such as MT940 and camt.053, into the same position as payout partners and wallets.
Polynopsis reads nostro balances from bank statement files such as BAI2, MT940 and camt.053 into the same position as partner and wallet balances.
Frequently asked questions
What is the difference between correspondent banking and nostro account?
Correspondent banking is the relationship: one bank holds deposits for other banks and provides payment services. A nostro account is the account at the centre of it, seen from the bank that owns the money.
What is Correspondent banking?
Correspondent banking is an arrangement in which one bank holds deposits owned by other banks and provides them with payment and other services. The CPMI calls it an essential component of the global payment system, especially for cross-border transactions.
What is Nostro account?
Nostro account means an account a bank holds with another bank, usually abroad and in foreign currency. Nostro is Latin for 'ours': the owner sees it as 'our account with you'.
Sources
- Correspondent banking (July 2016) · Committee on Payments and Market Infrastructures, Bank for International Settlements
- On the global retreat of correspondent banks, BIS Quarterly Review, March 2020 · Bank for International Settlements
- Balances on nostro and vostro accounts (from IMF External Debt Statistics: Guide for Compilers and Users) · UN ESCWA, citing the International Monetary Fund
- Correspondent banking · ACT Wiki, Association of Corporate Treasurers
- Liquidity bridges across central banks for cross-border payments · Committee on Payments and Market Infrastructures, Bank for International Settlements
Know where all your money is.
Polynopsis gives cross-border payment teams one live position across every bank, payout partner, exchange and wallet, including money in flight, and warns before a corridor runs dry.
About Polynopsis
Polynopsis is liquidity management software for cross-border payment companies. The name joins poly, many, and synopsis, a seeing together: one live view of money spread across many banks, payout partners, exchanges and stablecoin wallets, including money in flight, with a warning before any corridor runs dry.
Why it is called Polynopsis · About Polynopsis · Glossary · Corridor runway calculator