Trade · 6 pages · 12 min
Why correspondent banks exist
A bank with no account in a foreign place pays through a bank that has one, so a local credit can still be made.
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From the opening
A correspondent bank holds an account for another bank and handles payments in a currency or a place the other bank does not reach itself. The customer bank can then offer payments there without opening a branch of its own. The opening covers one bank holds another's account, local clearing needs a local balance, and no shared system means a bridge.
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Inside
- One bank holds another's account
- Local clearing needs a local balance
- No shared system means a bridge
- Closing the account cuts the path
- Where the idea stops applying
- A distinction worth keeping
Sources
- Correspondent banking accounts
- Nostro accounts in cross-border payments