What is a nostro account?
Definition
A nostro account is an account a bank or payment company holds at a bank in another country, denominated in that country's currency, so it can make local payments there.
The name comes from Latin: nostro means ours, as in our money on your books. A US payment company paying out in Brazilian real keeps a real-denominated account with a Brazilian bank. The same account, seen from the Brazilian bank's side, is a vostro account. Together they are the plumbing of correspondent banking: money does not physically cross the border, balances at each end are adjusted instead.
For a payment company, every payout market needs its own nostro balance, and the balance has to be funded before customers are paid. That requirement is prefunding, and the capital it locks up is the main cost of running corridors this way. Stablecoin settlement removes the need to hold local balances in advance: fiat converts to stablecoins, moves in minutes, and converts to local fiat on payout. Our guide on eliminating nostro prefunding works through the numbers.
Related terms