Nostro Account

Nostro Account is a core term in international trade and interbank business, referring to a deposit account opened by a bank with another bank (usually an overseas correspondent bank) denominated in the currency of the counterparty bank's country. The term originates from Latin, meaning 'our account', i.e., named from the perspective of the account-holding bank. Its usage scenarios mainly include: cross-border remittances, letter of credit settlement, trade finance, foreign exchange transactions, etc. For example, Bank of China opens a USD Nostro Account with Citibank in New York to handle USD receipts and payments. Notes: The account currency is usually the currency of the account's country; an agreement must be signed with the correspondent bank specifying fees, overdraft limits, etc.; reconciliation must be timely to avoid overdrafts or idle funds. It is the opposite of 'Vostro Account', which is an account held by a correspondent bank denominated in our currency. Additionally, unlike 'Nostro Account', a 'Mirror Account' is a mirror account used for internal bookkeeping. Proper use of Nostro Accounts can accelerate fund settlement and reduce exchange rate risk, but attention must be paid to compliance and anti-money laundering requirements.