Nostro and Vostro Accounts

Nostro and vostro are the two sides of the same correspondent-banking account, named from the Latin for ours and yours. When a bank holds foreign currency at a partner bank abroad, it calls that balance its nostro account; the foreign bank records the identical balance as a vostro — an account it maintains on behalf of the other institution, denominated in its own home currency. These accounts are the plumbing through which cross-border payments and the settlement legs of foreign-exchange trades actually move: delivering euros to a counterparty ultimately means debiting or crediting a nostro balance held at a bank inside the euro area. Reconciling nostro balances is a core back-office task, and infrastructure such as CLS was built partly to reduce how much money must sit in these accounts awaiting settlement.