Nostro and vostro accounts
Understand nostro and vostro accounts, how correspondent payments use them, and what stablecoin settlement changes for payment operations.
A nostro account is an account a bank holds with another bank, commonly to make and receive payments in a foreign currency. Vostro describes that same account from the bank holding the funds. They are two perspectives on one banking relationship.
For a payments team, the important questions are who holds the funds, who can move them, and how much liquidity must be available before a payment can complete.
One account viewed from two banks
Suppose Bank A holds a dollar account at Bank B. Bank A calls it its nostro account, meaning our account with you. Bank B calls it a vostro account, meaning your account with us. Bank A records a claim on Bank B; Bank B records its obligation to Bank A.
| Perspective | Name | Operational question |
|---|---|---|
| Bank A, which owns the balance | Nostro | Do we have enough available dollars to fund the payment? |
| Bank B, which maintains the account | Vostro | Can we execute this customer's instruction under the account agreement? |
The BIS guidance on foreign exchange settlement risk describes these accounts within correspondent banking. The account relationship provides access to services; it does not establish one universal payment speed or fee.
How an account supports a payment
In a simplified example, Bank A instructs Bank B to use its dollar balance to pay a beneficiary. Bank B debits the account and arranges the receiving leg. Additional institutions, currency conversion, and local payment systems may be involved.
An instruction sent successfully is different from a beneficiary receiving funds. Operations teams should retain the instruction identifier, account entry, fees, any FX trade, and final delivery confirmation. See the broader payment rails comparison for how messaging, clearing, and settlement differ.
Why prefunding matters
Holding a nostro account and prefunding it are different decisions. The account is the arrangement; prefunding is putting liquidity in place before payments need it. Available credit, incoming payments, and the service agreement can also affect funding needs.
For an illustrative payout program, a team might track three figures separately: the account balance, the amount already committed to pending payouts, and the amount immediately available for new instructions. A large balance can still conceal a shortage if most of it is reserved.
Replenishment cutoffs, holidays, currency exposure, and access to credit determine how much buffer a particular program needs. A count of destination countries alone does not determine the number or size of accounts required.
What stablecoin settlement changes
Stablecoin transfers can provide another way to move value between participating providers. Tempo supports near-instant onchain settlement around the clock, so an operator can evaluate whether faster replenishment reduces balances held ahead of demand.
That benefit depends on the complete flow. A provider paying recipients in local currency still needs conversion liquidity, a supported payout method, and confirmation from the receiving provider. The bank account may remain part of that flow. A stablecoin balance also carries different issuer, custody, and redemption considerations from a bank deposit.
Use the cross-border payments guide to assess the full payment and the reconciliation guide to connect its records.
FAQ
Are nostro and vostro accounts separate accounts?
They can describe the same account from opposite sides. The bank holding money at another bank calls it a nostro; the servicing bank calls it a vostro.
Is a nostro account the same as prefunding?
No. Nostro describes an account relationship. Prefunding describes placing liquidity ahead of expected payments, which can happen in several types of account or provider arrangement.
Do stablecoins eliminate correspondent banking?
They can replace or complement parts of a settlement flow. Fiat collection, currency conversion, bank payouts, and issuer redemption can still depend on banking relationships.