Behind every cross-border wire transfer sits a humble pair of bookkeeping accounts: nostro and vostro. They are the same account viewed from two sides — and they are the substrate that makes correspondent banking work.
Nostro means "ours" in Latin. From the perspective of Bank A, a nostro account is the account Bank A holds with Bank B, denominated in Bank B's home currency. For a UK bank holding a USD account with Citi New York, that USD account is Bank A's nostro.
Vostro means "yours". From Bank B's perspective, the same account is a vostro — "your account with us". Citi New York sees the UK bank's USD account as a vostro held by Citi for the UK bank.
A USD wire originated by the UK bank works as follows: the UK bank instructs Citi NY to debit its nostro (the USD it holds) and credit the beneficiary's bank (which has its own nostro at some US bank). Behind the scenes, this is a CHIPS or Fedwire transfer.
Banks reconcile nostros daily via MT940 / MT950 statements. Reconciliation breaks (recorded transaction not yet posted, or vice versa) generate exception items handled by treasury operations.
The economics: holding nostro balances ties up liquidity. Banks try to keep nostro balances minimal — just enough to cover daily payment flows. Some banks pay end-of-day to repatriate excess to invest overnight.
For end customers, nostros are invisible — but they are the reason your cross-border wire takes multiple hops. Each pair of correspondent banks needs a nostro/vostro relationship to settle.
"Theirs" — a third-party account viewed from a position of intermediation. Less commonly used; some banks reserve "loro" for accounts maintained on behalf of clients' clients.
Liquidity costs and AML/de-risking pressure. Maintaining a vostro for a high-risk-jurisdiction bank can trigger regulatory scrutiny that some US correspondents prefer to avoid.
Fintechs typically hold funds with a partner bank that has the nostros. Some larger fintechs (Wise, Revolut) have built direct holdings in multiple currencies but most use partner banks.
Indirectly — GPI exposes the credit timestamps at each bank, which are the moments the nostros are debited/credited. The accounting itself is internal to each bank.