Explainers & Analysis: Banking

Diagram of one balance in two bank ledgers: nostro, our account with you, and vostro, your account with us, linked by arrows for account, statement and reconciliation

Banking · Oct 31

Nostro vs Vostro Accounts: One Balance, Two Bank Ledgers

Why nostro and vostro are two views of one correspondent account, and how banks reconcile the balance.

Black-and-white timeline of a settlement account balance: a payment of 500 at 09:30 pushes it below zero, the gap is bridged by intraday credit, and a receipt of 600 at 11:00 leaves it at +100 by the close.

banking · Oct 30

Intraday Liquidity: How Banks Fund the Payment Day

Why a bank can be liquid at day-end but still need funds before a payment deadline.

Diagram comparing gross and net settlement: on the left, banks A and B exchange two separate payments; on the right, the obligations are offset into one net position from A to B.

payments · Oct 30

Gross vs Net Settlement: How Payment Systems Move Money

Gross settlement moves each payment; net settlement offsets obligations before money moves.

Monochrome comparison showing bank capital absorbing losses and bank liquidity meeting cash outflows over a 30-day stress period.

banking · Oct 29

Bank Capital vs Liquidity: What Each Buffer Does

Capital absorbs losses. Liquidity meets cash outflows. A bank can have enough of one and still run short of the other.

Three US payment rails connecting FedNow, RTP and ACH nodes

FedNow · Oct 24

FedNow vs RTP vs ACH: How US Bank Payments Move

FedNow and RTP settle instantly; ACH moves credits and debits in batches. Compare reach, timing and finality.

Fedwire gross settlement and CHIPS netting paths compared

Fedwire · Oct 22

Fedwire vs CHIPS: How High-Value Dollar Payments Settle

Fedwire settles payments one by one; CHIPS uses liquidity-saving netting. Here is what that changes in practice.

Monochrome UETR diagram showing one 36-character payment reference passed between originating and beneficiary banks

UETR · Oct 21

UETR Payment Tracking: How Banks Trace a Swift Transfer

How a 36-character UETR helps banks trace a Swift payment—and what it cannot prove.

Bar diagram of the minimum share of an EU e-money token reserve held as bank deposits, 30% for all issuers and 60% for significant tokens as described by Circle, with two figures below: $3.3 billion of USDC reserve cash at Silicon Valley Bank in March 2023, about 8% of the reserve, and the EBA's 1.5% cap on reserve exposure to one bank.

Banking · Oct 20

Stablecoin Reserves in Bank Deposits: Why Issuers Hold Cash at Banks

Redemptions are paid in bank money, so issuers keep part of the reserve at banks. MiCA sets a minimum; March 2023 showed the risk.

Three-column comparison of a stablecoin, a CBDC and a tokenized deposit: the issuer is a private company, a central bank or a commercial bank; the backing is reserve assets, no separate reserve or the bank's balance sheet; the holder's claim is on the issuer, the central bank or the bank.

Banking · Oct 11

Stablecoin vs CBDC vs Tokenized Deposit: Who Issues It and What Backs It

Three kinds of digital money, three different debtors: a private issuer, a central bank or a commercial bank.

Correspondent banking roles: respondent, deposit-holding correspondent and settlement arrangements.

Banking · Oct 9

Correspondent Banking: How Banks Use Other Banks to Pay

The accounts and bank relationships behind cross-border settlement, and the risks a payment message cannot remove.

Bank deposit and token claims shown side by side

Banking · Sep 3

Tokenized Deposits and Stablecoins: The Difference

A digital token does not tell you who owes the money. Start with the claim behind it.

A vault with keys, access and custody records

Banking · Aug 23

How Banks Hold Digital Assets for Clients

Custody is about authority, records and recovery—not simply putting a key in a vault.

A bank account connected to an onchain balance

Banking · Jul 30

Why Crypto Companies Still Need Bank Accounts

An onchain business can still have offchain bills, reserve assets and customers who need cash.