Nostro and Vostro accounts facilitate international transactions and foreign exchange, providing banks a way to hold and manage foreign currency. These terms describe the same bank account from different perspectives:
- A bank account held by a bank in a foreign country, in the currency of that country, is referred to as a Nostro account. "Nostro" is derived from Latin, meaning "our account." For example, if an American bank has an account with a British bank in British Pounds, that is a Nostro account for the American bank.
- Vostro Account is the same bank account, but from the perspective of the bank where the account is held. "Vostro" also comes from Latin and means "your account." So, in the above example, the British bank would refer to this account as a Vostro account.
